Committee Meeting Information

June 12, 2009

Game and Fish Department Regional Office Building

Casper, Wyoming

 

Committee Members Present

Senator Henry H.R. “Hank” Coe, Co-Chairman

Representative Del McOmie, Co-Chairman

Senator Kit Jennings

Senator Mike Massie

Representative Bob Brechtel

Representative Cathy Connolly

Representative Bernadine Craft

Representative Ross Diercks

Representative Alan Jaggi

Representative Robert McKim

Representative Matt Teeters

 

Committee Members Not Present

Senator Ken Decaria

Senator Michael Von Flatern

Representative Tom Lubnau

 

Legislative Service Office Staff

Dave Nelson, School Finance Manager

Matt Sackett, Research Analyst

Brenda Long, School Finance Analyst

Josh Anderson, Staff Attorney

 

Others Present at Meeting

Please refer to Appendix 1 to review the Committee Sign-in Sheet
for a list of other individuals who attended the meeting.

Executive Summary

The Committee met for one day in Casper.  The Committee heard information on the fiscal profile of the school foundation program and heard an update on stimulus funds.  The Committee heard a report on potential reductions to spending from the school foundation program.  Finally, the Committee received information on the funding of special education and transportation in the schools.

 

Call To Order

Co-Chairman McOmie called the meeting to order at 8:30 am.  The following sections summarize the Committee proceedings by topic.  Please refer to Appendix 2 to review the Committee Meeting Agenda.

 

School Foundation Program Fiscal Profile and Federal ARRA (Stimulus) Updates

Mr. Matt Sackett of the Legislative Service Office provided a handout to the Committee on the May 2009 CREG report (see Appendix 3 for a copy of the handout).  Mr. Sackett described the CREG report and noted that the projected price for natural gas was decreased from the previous projection and that the projected production of coal was reduced by 20 million tons from the previous projection.  Mr. Sackett noted that the other significant change was a policy change for the accounting of capital gains and capital losses.  He noted that there is a lag in property tax collections and stated that the collections for 2008 which were at a high level, are just now being recognized and will not be collected until fiscal year 2009-2010.  He stated that the lag is propping up the revenue flow for now, but in the future the reductions will be seen in the property tax collections.

 

Mr. Dave Nelson of the Legislative Service Office noted that the CREG projections will be revised in October and again in January.

 

Ms. Brenda Long of the Legislative Service Office provided handouts to the Committee on the School Foundation program account (see Appendix 4 for a copy of the handouts).  Ms. Long explained the handout on federal mineral royalty (FMR) diversions and noted that capital construction and the school foundation program are very interrelated.  She noted that there would be a sweep of funds from the school foundation account over $100 million to the school capital construction account.  In response to a question, Mr. Nelson noted that the end of this fiscal year (2008-2009) is the first portion of the biennial sweep.

 

Ms. Long explained the projections for the school foundation program and noted that the projections for the end of fiscal year 2011 show a balance of $5.5 million in the school foundation program account.  She noted that if you also assume an additional 4% external cost adjustment (ECA), which was the rate approved in the 2009 session, there would be a deficit of approximately $29 million.  She noted that there was no official prediction for 2012 because it would be after recalibration, but stated that if you project the funding to continue as is with a 4% (ECA) there would be deficit of $100 million.  On top of that $100 million projected deficit would need to be added the loss of the $100 million account balance existing at the start of the biennium.

 

Mr. Matt Wilmarth of the Department of Education provided a handout to the Committee on funding trends (see Appendix 5 for a copy of the handout).  He noted that in 2011 the Department is predicting that the school funding entitlement will exceed the local resources.  He stated that in fiscal year 2009-2010 the local resources will be high so there will be less demand on the entitlement, but in the next year the local resources will be lower so there will be a greater demand on the entitlement funds.

 

Mr. Nelson noted that although the funds in excess of the $100 million required school foundation program balance will be swept to the school capital construction account, the funds would just sit in the account and could not be spent until appropriated by the Legislature.  Ms. Long noted that because the funds will just sit there, the predicted balance for the school capital construction account is approximately $210 million for fiscal year 2010.  However, Ms. Long noted that there is also a predicted deficit in major maintenance of $15 million for fiscal year 2009.

 

In response to a question, Mr. Mike O'Donnell, State's Counsel noted that previously the interpretation on how a district could use major maintenance funds was very restrictive but noted that the Commission was now interpreting the use more liberally and noted that while it could not be used to add a new wing to a building the more liberal interpretation allows major maintenance funds to be used more efficiently.

 

Ms. Mary Kay Hill of the Department of Education addressed the Committee on the federal stimulus funds.  Ms. Hill noted that the stimulus funds would affect two main areas: formula grants which are driven by federal law and stabilization funds where there is some minor state discretion.  Ms. Hill noted that as to the Federal Education Secretary’s portion of the stabilization funds, the state is still waiting on guidance.  Ms. Hill noted that the Governor’s portion of the stabilization funds is allocated to states to help cover budget shortfalls but that if the funds are not needed for a shortfall, they can be used for other purposes.  Ms. Hill stated that the Governor intends to use a portion of the stabilization funds for juvenile detention.  Ms. Hill noted that there would be approximately $67 million for education within the stabilization funds which must be spent by December 2011.  She noted that the current plan is to load the funds into the 2010-11 school year and that the stabilization funds would run through block grant.

 

State Superintendent Jim McBride noted that he would caution districts not to use stimulus funds to start new programs or make additional financial commitments.  He noted that because of the federal restrictions, the state would not have much creativity with how to use these funds.  He noted that some districts are now sitting on approximately $1.39 million in federal funds and that the superintendents of those districts were notified of the need to obligate those funds so that they were not lost.  He stated that there is some concern about all of the stimulus funds being able to be spent without waste.

 

School Foundation Program Spending Reductions

Mr. Nelson noted that one of the assignments of the Committee was to consider potential reductions to the school foundation program including a review of the model to determine areas where the model actually funded by the Legislature went beyond the recommendations of the cost-based Consultants.

 

Ms. Long provided two handouts to the Committee on differences between the funding model as implemented and the recommendations or policy considerations prior to the finalization of the model (see Appendix 6 for a copy of the handouts).  Ms. Long noted that the differences were noted using the 2005 recommendations of the consultant as the primary document.  She noted that some decisions were made prior to a preliminary model and that those were reflected in the second document.

 

Ms. Long explained lines three through ten of the chart and noted that those differences combined to approximately $49.6 million in additions to the recommendations of the consultants.  Ms. Long stated that the elements on lines 11 and 12 were areas where the model as implemented resulted in under funding the recommendations by approximately $30.4 million.  She noted that the final difference on the chart is line 13, where the Legislature provided funding for food service, but she noted that the funding will cease June 30, 2010.

 

In response to a question, Mr. O’Donnell noted that the measure for any changes in funding will be whether or not the state is delivering a cost-based education.  He noted that if the state looks at funding piece by piece it would be a more complicated analysis.  Mr. O'Donnell also noted that while the simpler way of making a percentage cut may be easier to understand, it may be more difficult to defend constitutionally.

 

Mr. Mark Higdon of the Wyoming School Board Association noted that school operations should have precedence over capital construction.  He stated that if the Legislature were to stop the capital construction sweep, it would help cover the projected shortfall.  He stated that if there is a need to make cuts, he would recommend that the Legislature do them on a percentage basis.  He stated that if the state were to make cuts piece by piece it would affect some districts more than others and that it would be preferable to take any hit as a whole.  He noted that the discussion on each piece should be during recalibration.

 

Dr. McBride stated that operations should be the first priority, the second priority should be major maintenance and the third should be capital construction.  He noted that the funding model should be based on school improvement, and any cuts to funding should be considered outside of the recalibration of the model.

 

Ms. Long explained the other handout dealing with early policy options.  She noted that the initial recommendations of the consultants were modified to reflect Wyoming practices pertaining to school operations and were different than what the consultants may have recommended originally.  She noted that one consideration was the treatment of average daily membership using a 3 year rolling average.  Ms. Long noted that this policy resulted in funding an additional number of students.

 

Ms. Long noted that the other policy consideration was class size where the consultants recognized Wyoming's practice of using a class size of 16 for K-5/6 and 21 for middle school and high school.  She noted that in other states the consultant had recommended class sizes of 15 for K-3 and 25 for higher grades.

 

Ms. Long stated that from the differences in funding identified in both of the documents, the net amount that the state funded over initial consultant recommendations is approximately $70.8 million.

 

Special Education/Transportation Funding

Mr. Leeds Pickering of the Department of Education provided two handouts to the Committee on transportation (see Appendix 7 for a copy of the handouts). Mr. Pickering noted that the information gathered on daily miles was collected each year on the Wednesday closest to Lincoln’s birthday (February 12) and provides a snapshot of the number of miles traveled on that day. He noted that in FY2007-2008, approximately 75,961 miles were traveled every day across the state.  Mr. Pickering noted that a field trip is standards based and would be reimbursed, as would an activity trip which is sanctioned by the Wyoming high school activities association.  Exemplifying, he noted that a ski club is not sanctioned and would not reimbursed, but that a ski team which is sanctioned would be reimbursed.

 

In response to a question on the load of each bus, Mr. Pickering noted that the state does not collect that data.  He stated that if the state were to collect load information, the information might be deceiving because of the sizes of the seats.  He noted that while not all of the districts are bussing students in the most efficient way, it is not that much less efficient to run a larger bus than is needed for the number of students to cover situations where the larger capacity is required.

 

Mr. Pickering noted that school bus route miles for the entire year have gone up little by little and stated that there is urban sprawl even in Wyoming.  In response to a question, he noted that the information on route miles was collected by recording the actual odometer miles.  Mr. Pickering also noted that activity miles have been going up, partially a result of the activities association scheduling.  He noted that the information on cost per mile does not include the capital outlay for the vehicle but it does include drivers, supervisors, gas, oil, tires, training costs and heating costs for the bus barn.

 

Mr. Pickering noted that since FY1998-1999, school activities have stayed the same relative percentage of overall transportation.  He also noted that salaries have remained around 73% of the total cost.  Mr. Pickering noted that districts are reimbursed at 100% on a base spec bus basis but noted that each school district can get waivers from this base price and that the bus buying process is still free market by school district.  Mr. Pickering noted that the fleet size is smaller now than when the state first started reimbursing for transportation and that the total is now at 1711.

 

Ms. Long provided two handouts to the Committee on special education (see Appendix 8 for a copy of the handouts).  Ms. Long noted that the report provides a 5 year historical look at special education expenditures.  She noted that there was a large increase in expenditures during the 2006-2007 school year due in large part to salary increases resulting from 2006 recalibration.

 

Ms. Stephanie Weaver of the Department of Education noted that the department has developed a focused monitoring system for special education.  She noted that there are on-site reviews of approximately 9 districts each year.

 

In response to a question on comparing Wyoming to other states, Ms. Weaver noted that approximately 88% of the funding in Wyoming is state funding and 12% is federal funding, which is similar to other states.  She noted that while the Department does not have a cost per child comparison, the identification rate in Wyoming is similar to the rate in other states as well.

 

In response to a question on rules and regulations being adopted by the Department for special education, Ms. Weaver noted that the rules were still out for public comment and noted that the changes were made in response to the changes required by federal rules and regulations.

 

Future Committee Meeting

After discussion, the Co-chairs determined that the next meeting of the Committee would be scheduled for Casper sometime during the week of September 14, 2009.

 

Meeting Adjournment

There being no further business, Co-Chairman Coe adjourned the meeting at 3:00 pm.

 

Respectfully submitted,

 

 

 

 

Senator Coe, Co-Chairman                                            Representative McOmie, Co-Chairman

 

File Storage: 

 

 

 

 

 

 

 

 

Appendix		Appendix Topic		Appendix Description		Appendix Provider
1		Committee Sign-In Sheet		Lists meeting attendees		Legislative Service Office
2		Committee Meeting Agenda		Provides an outline of the topics the Committee planned to address at meeting		Legislative Service Office
3		CREG Summary		CREG Summary		Legislative Service Office
4		Fiscal profile		Fiscal profile		Legislative Service Office
5		Funding trends		Funding trends		Department of Education
6		Finance model		Finance model comparisons		Legislative Service Office
7		Transportation trends		Transportation trends		Department of Education
8		Special Education		Special Education information		Department of Education