Lawmakers continue to debate school funding

CHEYENNE —Discussion continues among state legislators about how best to bridge the gap in funding Wyoming’s K-12 education system. 

On Thursday, members of the Joint Revenue Interim Committee talked about raising the cap on severance tax distributions from $155 million to $200 million in the 2022 budget session, set to convene Feb. 14. The increase would allow for a 22.5% distribution to the School Foundation Program Account to help ease a projected $150 million shortfall in education funding.

Committee members also discussed the reason the state is facing the shortfall. 

“When we took [federal] COVID funds, did that not lock us into the current funding of K-12 education, and that is what is causing us this deficit?” Sen. Tom James, R-Green River, asked. “Was it because of the federal strings?” 

Federal education stabilization relief funds received due to COVID-19 came first through the CARES Act, then the CRRSAA Higher Education Emergency Relief Fund and, finally, through the American Rescue Plan Act, said Matthew Willmarth, senior school finance analyst with the Legislative Service Office. 

Initial funding had a “maintenance of effort” requirement placed on it by the federal government, meaning the state had to show a relatively constant level of education funding from year to year to qualify. Other funding had “maintenance of equity” requirements, meaning that funds should be used to meet the needs of all students, including those who may have been historically subject to opportunity gaps in the education system.

Those requirements only extend until fiscal year 2023, and after that, there are no requirements for the use of those federal K-12 education dollars, Willmarth said. 

“Acceptance of those funds are not the reason why there are structural shortfalls to the School Capital Construction [Fund] or the School Foundation Program Account,” Willmarth said in committee Thursday. 

“But they do contribute, because of the strings attached to those equity requirements? They do contribute to the deficit, though, correct?” James asked. 

Willmarth reiterated that while the state is required to maintain a certain level of funding support for schools, budget shortfalls are not the result. 

“Is that a yes, or a no?” Rep. Steve Harshman, R-Casper, the committee chairman, asked. 

“Mr. Chairman, no. I don’t believe so,” Willmarth said. 

Harshman offered his own interpretation of Wyoming’s education funding shortfall. 

“I think the big deal is we’ve gone from 500 million tons of coal down to 200 million,” he said. “That is the big deal. Let’s face it. That is why we are having all these talks in Revenue and Appropriations [committees].” 

For the 2021-22 biennium, the estimated transfer from the Legislative Stabilization Reserve Account to the School Foundation Program Account is projected to be $243.9 million, to retain $100 million at the end of the biennium. 

The projected School Foundation Program structural shortfall is approximately $100 million for 2023- 24, and then $78 million for 2025-26, Willmarth told the committee. The School Capital Construction Fund does have a structural shortfall, as well, and does not have the buttressing from the Legislative Stabilization Reserve Account. 

“That is projected to be $61 million for the 2023-24 biennium and $57 million for the 2025-26 biennium,” Willmarth said. 

Between legislative sessions, the committee was tasked with reviewing all existing state revenue streams and the distribution of federal mineral royalties, severance taxes and inheritance taxes. The draft legislation was approved Thursday, so it will move forward for further discussion.

Nearly half of the severance tax allocation, or 48.2%, would go to the state’s general fund. Other allocations would be made to water development accounts, the highway fund, and cities, towns and counties. 

Rep. Chuck Gray, R-Casper, said while he likes the idea of moving funds from an account where they will be spent to an account that has a deficit, he does not think placing those funds directly into the School Foundation Program Account would achieve consensus in the Legislature. 

“I also don’t think it is good policy,” he said. 

He proposed an amendment that would divert the money instead to the legislative reserve account. 

“I don’t think there is a huge difference, aside from perception, because those are backfilling schools anyway,” he said. 

The amendment failed. 

Harshman said that despite potential pushback, he would like to bring a possible solution forward for the education funding game when the Legislature convenes in 2022. 

“We keep talking about schools. Spending too much. We don’t have enough money. Coal. Whatever. Bottom line is, this is a way to reduce the deficit in our schools,” he said. “We are going to pull it right out of the [LSRA]. I agree with the politics of it, I totally agree, but we want to keep bringing solutions. I want to try to bring a solution to knock that $150 million to $100 million without raising anybody’s taxes.”