Fixing Wyoming’s looming deficit in education funding, estimated between $360 and $400 million, requires building consensus and approaching the problem from a variety of angles, key lawmakers say.
Three days after Christmas, a legislative subcommittee formed Dec. 19 to study options released a white paper defining the funding challenges and proposing a course for resolving them.
The Subcommittee on Education Deficit Reduction Options proposed splitting the solution into five distinct strategies. Those range from cutting funding to diverting existing streams of revenue. Some have even suggested examining sacred cows in Wyoming’s budget, like the large amounts of money stashed into water development accounts for building dams or reservoirs. The paper also suggested raising new revenue through taxes. Each area could yield approximately $80 million, which taken together would get the Legislature over the $400 million hump.
Speaker of the House Steve Harshman (R, HD-37, Casper) said the Legislature will have to consider all options. However subcommittee members and other legislators said that some of those five areas, most notably cutting funding, will be easier than others, particularly raising taxes. Democrats, outnumbered 78 to 12 in the 2017 Legislature, hope the education crisis will spur a deeper look at revenue strategies in the midst of a slump in mineral production.
The stakes, and the public interest in this issue, will be high as Wyoming’s 64th Legislature convenes today.
The subcommittee asked for public comment, and got plenty. House Education Committee Chairman David Northrup (R, HD-50, Powell) said his computer wouldn’t stop pinging as the emails came in. At noon on Wednesday, Jan. 4, Senate Education Committee Chairman Henry “Hank” Coe (R, SD-18, Cody) estimated that he’d received 75 to 80 comments that day. The two chairmen were interviewed separately.
“I think the chances are real good that we’ll come out with a product,” Northrup said of the coming session. “Whether it’s a product that everybody’s going to be happy with, I guarantee that will not be true.”
A solution, or a path toward one, must be found before the current two years of education funding runs out. While the state faces other budget problems — including the construction and maintenance of schools, the potential steep cost of repairs or replacement for the deteriorating state penitentiary, and a continued squeeze on general agency funding — the Wyoming Supreme Court requires the Legislature to treat education funding as a budgetary priority. The education-funding question could help drive the kind of wider discussions over revenue and savings accounts that are rarely popular in Wyoming.
“Everybody’s got their eye on the rabbit here, and the rabbit happens to be K through 12 funding,” Coe said, “because that’s the 800-pound gorilla in the room.”
A young Legislature
Northrup said he envisioned an omnibus bill that would begin in the House Education Committee, where he has scheduled three days of hearings beginning Jan. 16. From there, the bill could go to the House Appropriations Committee or the Revenue Committee. By the time it reaches the floor of the House, he said, “we [will] have a package that approximately 30 to 35 people have looked at.”
Getting the consensus of a significant number of legislators and experts in education, presumably including school district administrators and the Wyoming Education Association, before the package reaches the House floor is important, Northrup said. That’s because consensus will give it weight in the face of an inexperienced Legislature that may be awed by the complexity of the problem and any possible solution. Of the 60 representatives, at least 20 are in their first term. To solve the crisis in education, the Legislature will first have to school itself.
“When you go back and look at how many people are on their first term … that’s a lot of educating,” Northrup said.
Coe worried less about the Senate, where there are six new members. He said he is optimistic the new House members will learn quickly, but that the inexperience is troubling. “I worry about that a little bit, but I think they’ve got great leadership,” he said.
Both men said that new Speaker of the House Harshman helped move the joint committee toward a multi-part solution to the funding deficit. Rep. Northrup said it was the speaker’s idea. Harshman himself demurred, saying, “well, I think it’s just a lot of people kind of collectively putting their ideas together.”
Harshman is a teacher and head football coach at Natrona County High School. He has served on the appropriations committee since 2007. In 2005 and 2006 he was on the House Education Committee, and at various points he has served on select committees dealing with school facilities, school finance and school finance recalibration.
That means both that he has experience with various facets of a possible solution, and that he was in the Legislature when education spending increased as Wyoming’s cup overflowed with mineral revenues.
Statewide, the investment in education has shown results. “We are way better than we were 20 years ago,” Harshman said, pointing to test scores and graduation numbers. He also cited a recent ranking by the publication Education Week that ranked Wyoming’s quality of education as the seventh in the nation, and first among Western states.
If the Legislature cannot resolve the funding issue this session, Harshman said he plans a bill to create a super-committee of representatives and senators that will be directed to tackle the problem. That could even entail a special session of the Legislature to consider the super-committee recommendations, although Harshman did not mention specifics. He’s hoping a draft bill will originate elsewhere to get the ball rolling, and the House will be able to make some progress in the first half of the session.
For now, he said he is keeping the super committee bill in his back pocket. January 30 is the deadline for the introduction of legislation in the House. Until then, it won’t be public because of state law governing draft legislation.
Everything’s on the table.
Some legislators believe that without a hard look at increasing revenue for the state, this problem, and many other budgetary issues, can’t be solved. House Minority Floor Leader Cathy Connolly, (D, HD-13, Laramie) said the Legislature needs to take the education funding deficit as a sign that it’s time to “open up all the coffee cans, and open up the statute books, and take a good hard look.”
But the options in the white paper are “selective,” said Lawrence Wolfe, A Cheyenne attorney and longtime lobbyist appointed as a public representative to the Mineral Tax Task Force.
“We all know what the real issues are in Wyoming’s tax system — individuals, you and me — do not pay anything close to the cost of the services that the State provides,” Wolfe wrote about the white paper.
Sen. Chris Rothfuss (D, , Laramie) was the only Democrat on the subcommittee that produced the white paper. He said the education model is well-funded and, like Harshman, he noted its success in making Wyoming’s education one of the best in the nation. Revenue has to be part of the solution, he said.
“It’s unrealistic to think that we can have the same quality of education without changing our revenue,” he said.
As laid out in the white paper, Rothfuss hopes that one fifth, or $70 million to $80 million, of the deficit can be raised through new revenue. He specifically mentioned property taxes, saying the mineral revenues that paid for school construction and education funding have long represented a tax holiday for the Wyoming residents getting the benefits of good schools. It may be time for property holders to take up the slack, he said.
If no effort is made to find new revenue, that high-quality education could begin to slide, a pitfall the Legislature will have to avoid. “I have a feeling that it will be a lot easier to achieve mediocrity than to continue excellence,” he said.
None of the Republican lawmakers interviewed for this article saw tax increases as a likely possibility. At the same time, they recognized that the education funding deficit could not be solved by slashing budgets alone. While Harshman repeatedly said that every option had to be “on the table,” he also said raising taxes was the “absolute last resort.”
Sen. Coe especially was against the idea, saying if necessary it could be considered in the 2018 budget session. “I’m not going to support any type of revenue raising this session at all,” he said. “I’m rather optimistic that the mineral industry is going to come around,” he said, pointing to a recent uptick in coal production, and a more fossil-fuel friendly Washington D.C.
Coe aims to find $80 million to cut from the education budget. The white paper lists a series of possible reductions. Big ticket items include:
- reining in areas where spending has exceeded “cost-based” levels, for an estimated savings of $22 million annually;
- eliminating an instructional facilitator program for another $22 million;
- halving the funding for student activities like sports, which would save around $15 million;
- and halving the number of professional development days from ten to five, for $21.6 million.
All agreed that cuts to the public schools are inevitable. Each of the reduction targets would be contentious, Northrup said.
“Amendments, amendments, amendments,” he said. “Everybody’s going to have their particular area that they think should be choked or added to.”
Instructional facilitators serve as coaches to teachers and coordinators of professional development through the year. They sit in on classrooms and bring the latest in educational theory and critique to Wyoming schools. The state is one of only four that explicitly provide resources for such programs, according to an audit of the school funding model prepared for the 2015 Legislature by Picus Odden & Associates. Elsewhere, research has shown significant benefit to students as a result of instructional facilitators, the audit said.
Both Coe and Northrup said they’d seen some consensus in public comment about reducing instruction facilitators, and halving the number of professional days. Harshman, who also has been reading the comments, disagreed.
“There’s not at all consensus on any one thing,” he said. One commenter might suggest cutting instructional facilitators, while the next would call the program very important.
At this point, the only real consensus is that lawmakers believe reductions are far more likely than new taxes. Though as Harshman said, echoing other lawmakers, “you’re not gonna cut your way out of it, and you’re not gonna tax your way out of it.”
Apart from new revenue and budget reductions, the Legislature can consider current savings accounts or existing revenue streams that could offset the budget shortfall, all of which are mentioned only briefly in the white paper, which is three pages long.
A paragraph on current savings touched on the Legislative Stabilization Reserve Account, commonly referred to as the rainy day fund, and the School Foundation Program Reserve Account that will have an estimated $100 million at the end of the 2017-2018 biennium. Other suggestions were increasing the 1 percent statutory diversion of severance taxes, or the percentage of federal mineral royalties that goes to the School Foundation Program Account.
“There’s probably more options out there that were not listed in that white paper,” Harshman said
Connolly said she intends to keep the Legislature focused on revenue enhancements and diversions whenever possible. “I certainly am going to talk about it whenever there’s the opportunity,” she said.
In his comments on the white paper, former lobbyist Wolfe suggested the state’s Water Development Accounts could be a source of money for education. The accounts have designated revenue streams from severance taxes. Water Development Account III, which is slated for funding dam and reservoir planning and construction, holds $151 million, according to a 2016 fiscal profile put together by the Legislative Service Office.
“While everyone wants to believe that the State will build dams and conveyance systems, the reality is that these projects are of marginal benefit to the state as a whole, they benefit only a small handful of citizens and the large ones are not likely to be built in the near future, if at all,” Wolfe wrote. The “handful of citizens” that benefit are those in the ranching and agriculture industry.
While all options were on the table, Harshman said he believes that abandoning dreams of dam construction might be unpopular in a state where water is considered a precious resource. “I don’t think any of us are ready to give up on that dream,” he said.
Connolly considered the water development accounts to be indicative of the kind of orthodox spending strategy that the state should revisit in a time of budgetary crisis.
“Do we say hang on, slow down,” she said. “And do we divert some of that money for immediate needs?”
There are a few areas where taking out bonds, which Harshman said the state has not done in 20 years, could free money to be diverted to education. Traditionally, Wyoming’s Legislature has avoided bonding in favor of spending cash to avoid paying interest or taking on debt.
Gov. Matt Mead has proposed using bonds to pay for repairs of the Wyoming State Penitentiary in Rawlins. At a Joint Appropriations Committee meetings in December, the repair costs were estimated at between $87 and $120 million. A report by engineering firm Martin & Martin estimates that the cost of building a new prison at more than $257 million.
Speaking before that committee on Dec. 12, the governor suggested the state should consider bonding for that project, and noted the state has a AAA credit rating that it has not been using.
“I think bonding will have to be on the table,” Harshman said. When it comes to capital construction projects, the benefits and the costs are felt by multiple generations of Wyoming residents. “Why not spread that out over time?” he asked.
Guiding the discussion
Harshman was quick to downplay his role in facing the education crisis, saying “the wisdom of the group is going to be way more powerful than any one person.” However, as Speaker of the House, he’ll play perhaps the key role in guiding the multi-faceted discussion.
“I’m going to work hard,” Harshman said, “I’m going to set the example.”
The legislative leadership will be responsible for making sure the various committees are involved and that the public has a chance to add its input, Northrup said. “There can be no shortcuts,” he said.
That perhaps started with the white paper comments. On Jan. 5th, Harshman estimated that there had been at least 600 comments in the week since the paper’s release. “I’ve spent days reading them, late into the night,” he said.