CASPER – Wyoming’s education system is projected to face a roughly $1.8 billion shortfall by the end of the 2022 fiscal year, according to a recent report to the Legislature’s Joint Education Interim Committee.
The staggering number, which comes amid an energy industry downturn, has prompted some lawmakers to discuss further spending cuts and the need to raise additional revenues.
The school operations shortfall for 2019 and 2020 was projected to be about $720 million. The deficit was anticipated to increase another $800 million for the two years after that.
Meanwhile, school construction and maintenance are funded under a separate account, where income is already insufficient to meet the major maintenance needs of the state schools, much less any new construction.
“You’re looking at about a $186 million shortfall for the 2019-20 (budget cycle), then about a $189 million shortfall in 2021-22,” said Matt Willmarth of the Legislative Service Office, referring to the building account. “The reason for these larger shortfalls is, as we have noted in our reports, the past couple years no coal lease sales, and no bonuses, are forecast in our projections.”
The committee was told that the capital construction account would essentially be empty by mid-2018.
When the school operations and capital construction are added together, the Legislative Service Office estimates the total will be a $1.79 billion deficit by 2022.
The committee also received an update on the 2017-18 biennium budget, and the news was not any better. The education budget for the two years is $1.34 billion, but declining revenues have meant $640 million was not covered by income.
In its last session, the Wyoming Legislature tapped the Permanent Land Fund Holding Account, which is essentially the rainy-day fund for education, to balance the education budget. However, that required using up the entire $570 million reserve, which had been expected to last at least a few more years.
In giving the report, Willmarth said more information had come in since his last meeting with the committee in October. He said a $53 million calculation error had been made on the expenditure side, which was partially offset by lower-than-anticipated health insurance costs, but ultimately resulted in $25 million in additional deficits.
Willmarth informed the committee only one education account has available funds.
“The only, I would say reserve, account you are not tapping into – because there is no mechanism through law – is the School Foundation Program Reserve Account. That has $100 million sitting there,” Willmarth said.
While not discussed in the committee report, the state is also forecasting about $355 million in revenue shortfalls in the state’s general fund budget, which until this year has not been a part of education funding.
The general fund revenue shortfalls, however, will be partially offset by Gov. Matt Mead’s mid-year decision to cut $250 million from state agency budgets, which will still leave about a $156 million deficit for general government operations.
The state, meanwhile, has about $1.6 billion left in its general operations rainy-day reserve account.
The committee did not specifically discuss how to address the education funding deficits at its meeting, but the concern was obvious from the outset.
“I hope everybody listens up today. We don’t have a lot of very good news …” said Sen. Hank Coe, R-Cody, a committee co-chairman.
There was some inquiry about whether there had been a decline in student enrollment, a primary factor in school district funding, due to the downturn in the energy industry. The committee was told the official numbers would be available in December, but the projection was flat.
There was also a question about increasing the student-to-teacher ratio, which also influences funding. The state would save roughly $40 million a year for every additional pupil, for instance going from 21 students to 22 students per teacher in high school.
Sen. Allen Jaggi, R-Lyman, meanwhile, called for spending cuts.
“We can’t stay with what we’ve got and make it through,” Jaggi said. “I think we’ve got some tough, tough decisions to make just to balance things, without even adding one new thing. I don’t want to sound too pessimistic, I just think we’re in a mess, and we created that ourselves as a Legislature.”
Sen. Chris Rothfuss, D-Laramie, said the shortfall was not going to be resolved through reductions alone.
“We took during the boom days … $2.4 billion of revenue off coal lease bonus (money) on school facilities, while all through that period of time basically forgiving $2.4 billion of taxes that would’ve come into the state and local communities through mills on funding for those school facilities,” Rothfuss said.
“It’s not just on the cost side,” he added. “I don’t think we can cut our way out of this one. This is a large shortfall.”