When legislators gather in Cheyenne next month, they’ll be facing an unprecedented education funding crisis created by an economic downturn and fueled by years of generous spending.
The funding model that’s educated a generation of Wyoming students while largely keeping the state and its education system out of the courtroom for the past decade has hit a crisis point. State superintendent Jillian Balow said that historic spending levels are untenable. The funding shortfall could hit $1.8 billion by the 2022 fiscal year, according to a recent report.
“The truth of the matter is that we’re going to need to think about funding education as a Chevy rather than a Cadillac in the future,” Balow said.
The energy downturn, which is stretching into its second year, has struck school funding on a local and statewide level, education officials said. On Tuesday, Gov. Matt Mead said public school funding faces a “real crisis,“ one Wyoming couldn’t cut its way out of. Instead, the state would likely have to find new revenue streams.
“We don’t have enough money to fund education at the levels that we have been funding,” Balow said. “And we don’t have the cuts to education to balance that sheet.”
It starts with a landmark court case. In Campbell County v. the State of Wyoming, the Wyoming Supreme Court ruled that the state is constitutionally required to provide the best education possible. The court also held that not being able to pay for that education was not a reasonable excuse because “education is one of the state’s most important functions.”
The court ruled that a new funding model for education had to be cost-based and equitable, meaning that a fourth-grader in Teton County must receive the same quality education as a fourth-grader in Natrona County, state Sen. Hank Coe said.
What followed were several years of lawmakers hammering out a model to satisfy the court’s ruling. Eventually, the Legislature settled on what is known as the evidence-based model to finance schools.
Every five years, the model is recalibrated to adjust funding levels where needed and determine how much money each district needs. Consultants are brought in as part of that process, and they examine all aspects of education funding in Wyoming before making recommendations.
The primary factor in determining how much a school receives is attendance, though factors like location also come into play. Districts generally obtain their funding in block grants to use as they please, with a few parameters, Balow said.
Atop that model is what’s known as the legislative model. Coe described it as a decorated Christmas tree: The evidence-based model is the tree. The ornaments are the legislative model, and they represent programs like summer school.
Those ornaments can help augment the tree in between recalibration cycles, Coe said.
In the past, recalibration has meant more money for schools, as the Legislature funds above what may have been recommended, Balow said.
“Essentially the evidence-based model is the Chevy,” she said. And until recently, “we as the state have been able to provide the Cadillac.”
The double whammy
Natrona County School District Superintendent Steve Hopkins described the circumstances that led state education into this crisis as a double whammy: Because of intertwined revenue streams, schools started to lose funding on the local level as state sources of revenue that normally top off districts also dropped.
The statewide model for education funding is paid for through a series of levies:
A 12 mills foundation tax levied in every county in the state. That money goes to Cheyenne to be distributed to districts that need it.
There’s a 25 mills tax that’s collected within the boundaries of each school district, like Natrona County. That tax goes to the district.
Finally, there’s a six-mills, countywide tax that’s divided among the districts based on enrollment.
That’s the cycle of education funding in Wyoming, Hopkins said. Districts are funded on the local level while chipping in statewide, and each district is guaranteed a certain amount. For instance, if a school district is guaranteed $50 million, and local taxes generate $40 million, then the state kicks in the $10 million to meet the threshold.
How much a district is guaranteed is determined by a number of factors, but the largest is enrollment, officials said. The problem with that model, Balow said, is it relies on a three-year average.
“We’re paying three years from now based on students this year,” she said.
Most of Wyoming’s school districts, including Natrona County, take money from the state to meet their guaranteed funding threshold. These districts are called entitlement districts.
But districts whose local taxes exceed what they’re guaranteed, like Campbell County School District No. 1, send the excess to Cheyenne to be redistributed to entitlement districts, Hopkins said.
This model has worked to educate students on an equitable level and satisfy the courts.
But it started to go wrong two years ago, when the economy took a negative turn. That’s because as the money from local taxes dried up, so did the money that went back to the state. Roughly 70 percent of the state’s tax base is based in minerals. When oil, gas and coal prices dropped, local and state education funding pools fell with them. Those mill levies don’t fill coffers when the tax base shrinks.
Despite the decline in available funding, the school districts are all still guaranteed a certain amount. So the district that was guaranteed $50 million in 2013, before the downturn, is still guaranteed $50 million now, even as there is less money to meet that threshold.
On top of that, Balow said, the cuts made during the last recalibration process didn’t go far enough. That may have something to do with Wyoming’s history of finding a way to pay for education.
“I think the culture in our state has been ‘Find the money to pay for our schools,’” she said. “And we historically have been able to do that.”
But not anymore, she said. “We don’t have the money to find.”
For Natrona County, the double whammy has meant a 1.4 percent funding hit, which Hopkins said translates to about $2 million. How much funding the district loses in the future, after the Legislature meets, remains to be seen.
“At this point,” he said, “the shortfall is so massive, how do I even tag a number to it?”
Balow said that the court cases dictate equitable education for all students, but that doesn’t mean the funding has to hit a high price tag. This is a unique moment, she said, and looking back at past sources of funding won’t work now.
“It’s not there,” she said.