CHEYENNE -- A legislative committee voted Tuesday for no increase in the cost-of-living adjustment for the state's K-12 public schools for next year.

The Joint Appropriations Committee also voted for a 1.5 percent increase in the employers' contribution to the state retirement fund as the first phase of a 2.8 percent boost.

The Wyoming Retirement Board recommended the move to keep the state retirement system actuarially sound.

The two actions will adversely impact the school districts, two superintendents said later Tuesday.

"I understand the state is going through a difficult, challenging time," said Ted Adams, superintendent of Laramie County School District 1 at Cheyenne. But the two actions amount to a cut in funding, he said.

"We'll get the same funding but we'll have to pay 1.5 percent more in all of our employees' retirement, which essentially is a very significant cut because 85 percent of our budget is people," Adams said.

The Cheyenne school district has 2,500 employees and pays all their retirement contributions as well as the district's share.

Richard Luchsinger, superintendent of Niobrara County School District 1 at Lusk, said the zero adjustment was expected.

"It will definitely impact budgets, particularly in light of the additional retirement benefit that might be tacked onto the current percentage," he said in an e-mail.

He said many school superintendents are waiting to see what the Joint Education Committee does this week.

The committee will look at the proposed budget for the school foundation program for 2011-2012 during a meeting today and Thursday in Casper.

"We will continue to provide the best education we can for the students of Wyoming," Luchsinger added.

The so-called external cost adjustment has been in effect for several years through the school foundation program formula. About 80 percent of the money statewide is used for salaries.

The districts receive all their money for school operations in a block grant from the state, which allows the local school boards to decide how to spend the money.

Because of that flexibility, the absence of state money for a cost-of-living raise does not preclude a district with sufficient resources from granting raises to its employees.

As Rep. Pete Jorgenson, D-Jackson, pointed out, the Legislature does not know where the cost-of-living money goes because the local school boards decide how the money will be spent.

The committee members said they can come back in a year and decide whether revenues are sufficient to plug in an increase to the cost-of-living adjustment for fiscal year 2012.

"We know the state is flatlined," said Sen. Phil Nicholas, R-Laramie, the committee co-chairman.

"The school districts can hold their breath for a year," and will not have to lay off employees, he added.

Ken Decaria, a former teacher and legislator who now is government relations director for the Wyoming Education Association, said he doesn't believe the committee is looking at no increase going forward.

"I think they're looking at the big picture," he said. "It's tough all over. We understand that. I appreciate it that they're looking at trying to stabilize funding funding so we don't have the ups and downs we had in the 1980s."

Sen. Mike Massie, D-Laramie, said the Legislature can look at the educational programs approved when money was plentiful, such as trust land preservation and enhancement, a litigation fund, and education facilitators, to see if they could be eliminated.

If so, there might be enough money next year for a 3 percent cost-of-living adjustment for the schools, he said.

Massie also suggested the committee start discussing the so-called rainy-day account when it meets again in December.

Sen. Curt Meier, R-LaGrange, noted the state lost $1.7 billion in anticipated revenues in the past year. He said there should be at least that much in a rainy-day account but there isn't.

With too little in reserves, he said, Wyoming could become like other states and start "selling state cars on e-bay."

Contact capital bureau reporter Joan Barron at 307-632-1244 or joan.barron@trib.com