State adds roughly $68M in K-12 funding so far this year

Wyoming has added an extra roughly $68 million in K-12 school revenue so far this year, outpacing predictions by a wide margin, according to the Consensus Revenue Estimating Group, which released its second quarterly report on July 28.

Each year, the Consensus Revenue Estimating Group, or CREG, issues a set of forecasts in October and January estimating all the money the state will bring in over the next fiscal year.

The group projected Wyoming’s School Foundation Program Account, which pays for the state’s public schools, would collect approximately $515 million in revenue during the 2023 fiscal year. It was a significant underestimate.

As of June, the state had topped $523 million in K-12 money with another three months to go. Wyoming’s school revenue was on pace to surpass forecasts this year by just over 13%.

CREG attributed the better-than-expected showing to strong energy prices and production, especially in the state’s natural gas industry during last winter.

“Several winter weather events on the western part of the U.S., particularly California, boosted regional prices tremendously from high demand for heating, and Wyoming producers benefited from the unprecedented prices for a couple of months,” the group, which consists of finance leaders from the state and the University of Wyoming, wrote.

The price of natural gas has so far been 40% higher than CREG’s projections, while coal prices have also outstripped forecasts. Oil is also up slightly from last year, though prices have not met forecasts.

Wyoming’s improved energy landscape translated to an additional $64.6 million in federal mineral royalties for the state’s schools, while leases and bonuses from state school lands have exceeded CREG forecasts by another $3.4 million.

The only bad news for Wyoming school districts is the state’s K-12 investment income has fallen roughly $15 million short of predictions, though state reserves will automatically backfill any shortfalls created by poor investment returns.

CREG’s July report largely backed up an earlier assessment that showed the state was on pace to bolster its education finances.

Since the group’s last report in April, Wyoming’s school fund has only widened the gap between projections and actual revenue.

The added money is a welcome sign and will likely be of some relief to school districts and state lawmakers. Wyoming has recently been mired by a series of education funding shortfalls.

In 2021, the Legislative Service Office estimated Wyoming faced an annual $300 million “structural shortfall” in the state’s K-12 funding amid declines in the energy industry, particularly coal.

Another analysis last year by the Legislative Service Office pegged the shortfall for K-12 schools at $192.8 million for 2023 and 2024, requiring the state to pull money from other parts of its budget.

Though the state is on pace to see significant gains in its education revenue, CREG cautioned that the final balance may be closer to the group’s original estimates by the end of the fiscal year. Energy prices have fallen since their swell last winter, with natural gas spot prices reaching their lowest point in three years.

The group highlighted the long-term energy trends that continue to create headwinds for Wyoming’s state budget.

“Wyoming’s natural gas production, nonetheless, continued the trend of long-term decline,” the group wrote. “Mostly due to falling natural gas prices and retirement of coal power plants, U.S. power generation from coal continued to decline steeply.”

Gov. Mark Gordon expressed cautious optimism, following CREG in pointing to both stronger than expected revenues earlier in the fiscal year and slouching energy prices and production in recent months.

Gordon will outline his vision for K-12 school spending and any extra education revenue the state finishes with when he releases his two-year budget proposal in November.

“We must recognize the potential of future challenges and be realistic in our assessment of our ongoing financial picture,” he said in a July 28 statement. “We should appreciate that Wyoming has been conservative with the windfalls that have come our way in recent years. We must continue to be vigilant in our ongoing spending.”