Wyoming faces educational funding shortfall as mineral revenue declines

Wyoming lawmakers likely will face tough choices in coming years over how to fund the state's K-12 educational system because of falling mineral revenue, legislative staffers warned Wednesday.

Don Richards, budget and fiscal manager for the state's Legislative Service Office, said the school system faces a shortfall of nearly $580 million from mid-2016 through mid-2020, even after spending some reserve funds. The shortfalls are based on current projections that the state's share of the total budget for K-12 education for those years will run about $900 million annually.

Continue Reading Below

"You can see sizeable shortfalls for K-12 education in the next bienniums," Richards told lawmakers at a briefing Wednesday in Cheyenne, referring to the state's two-year funding cycle.

The projections assume there will be no change in how the state chooses to fund its school system and that student enrollment continues to increase at 1 percent a year.

Wyoming is the nation's leading coal producer and relies heavily on federal mineral revenue to fund education. State forecasters have projected federal mineral revenue will likely fall from just over $1 billion last year to about $688 million in 2020.

Gov. Matt Mead has blamed tighter federal air quality standards and other restrictions for reducing demand for Wyoming coal. His administration has launched several lawsuits challenging federal standards and is pushing to try to get access to ports in the Northwest to allow coal exports to Asia.

Rep. Steve Harshman, chairman of the House Appropriations Committee, said not counting transfers from reserve funds, the state's K-12 education budget including operations and construction faces anticipated shortfalls of roughly $320 million a year for 2017 and 2018, and about $200 million a year for 2019 and 2020.

"That's a lot. We've got a lot of work to do," said the Casper Republican, who is co-chairman of the joint House-Senate committee that heard Wednesday's presentation.

In the coming 2017-2018 biennium, the state's account for school construction will receive an estimated $137 million in revenue, while spending is projected at more than $510 million, Richards told the committee. That would leave about $373 million in unfunded construction costs.

In the 2019-2020 biennium, school construction costs are projected to be about $200 million while revenue would only reach $26 million, leaving a $174 million shortfall, Richards said.

The state's options include spending less, particularly by possibly cutting school construction, Richards said. However, he noted that Wyoming courts have imposed mandates requiring support of K-12 education.

"So there may be some limitation on any reduction in K-12," he said.

There's also the possibility that the state could see a rebound in energy revenue or that the state could fund education from other accounts, including the general fund.

The state could also use revenue enhancements, or diversions of existing revenue streams, Richards said. "That's just a nice way of saying taxes," he said.

Speaking after the committee meeting, Harshman said the state has saved money in anticipation of lean times and lawmakers will have to consider how to address the situation. The state had roughly $1.8 billion in its "rainy day fund" as of January.

Harshman said the state's funding picture underscores the importance of Wyoming trying to fight tighter federal energy restrictions.

"We all pay our own property taxes, but it pales compared to what large energy producers pay in the state," Harshman said. "About 70 percent of the property taxes are minerals-based. So it's huge."