Declining energy production impacting K-12 education funding

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Via Representative Steve Harshman, Chairman of House Revenue Committee and Representative Jerry Paxton, Chairman of House Education Committee

CHEYENNE, WYOMING (March 10, 2021) – Wyoming’s K-12 Education (School Foundation Program (SFP) and School Capital Construction Account (SCCA)) are facing a $300 million annual structural deficit. This shortfall owes to rapidly declining coal and natural gas production and prices, which have reduced the State’s funding sources and diminished school district property tax collections.

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Wyoming funds its schools like most states—with property taxes. Wyoming is blessed in that minerals pay 50% of our property taxes, allowing Wyoming residents, old and new, to enjoy the fifth-lowest property taxes in the country.

Local school property taxes from minerals have declined dramatically. Our state’s mineral severance tax and Federal Mineral Royalties have dropped to the lowest levels in decades, and Wyoming has lost over 200 million tons of coal production per year in the last few years. That is a 50% drop. The result is a one-two punch making it difficult for the Legislature to fulfill our Constitutional duty to fund an “equitable” public education for Wyoming’s children. This is a double whammy, as our school funding is the most mineral-dependent service of our state government.

Without further legislative action, our schools will use $331 million of the Legislative Stabilization Reserve Account (LSRA), the state’s “rainy day” fund, in next school year and the coming years.

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K-12 Education Budget Size  

Wyoming’s K-12 Education budget obligations are virtually equal to its General Fund obligations. In FY 2021, General Fund appropriations were approximately $1.312 billion, compared to $1.534 billion for K-12 Education (including operations; excluding capital construction).

School funding is provided by local school districts and then the State. As property taxes have declined because of falling mineral and energy values, a greater share of K-12 funding has been shifted onto the State. But State revenues to meet those responsibilities are also falling.

To close the gap, the State must either create new revenues (taxes), redirect current funding streams, reduce spending (cuts) or a combination of these. Moderation in all these areas can produce a long-term permanent solution.

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