School District Spending Demands – A Disconnect

• The legislature must rein in out-of-control spending demands

Wyoming school districts are funded using the School Finance Block Grant Funding model. About half of the funding for these block grants comes from the state's School Foundation Program account, and the other half from local revenue sources. For the 2015-16 biennium, the state's contribution to the block grant is, so far, about $1.5 billion. This means that total school district block grant funding for the biennium should total about $2.78 billion.

Even though this is a 3.3 percent increase over 2013-14 funding, some school districts say they need more. But do they? The discussion at the Joint Appropriations Committee (JAC) meeting in October 2014 indicates a disconnect between what school district say they need and what they do with their block grant,

The model is recalibrated (read—inflated) every five years. Between five-year periods, school districts can get an external cost adjustment (ECA) that inflates professional and non professional salaries, and education material and energy costs. Legislators have also given more money to school districts outside of the model. After the 2006 recalibration, the guaranteed payment under the block grant funding model went up by 31 percent. But there is more. With both model guarantees and this additional funding, school district funding has increased by 74 percent since the 2005 school year.

According to the Bureau of Labor Statistics, inflation between 2005 and 2014 was 21 percent. School districts could teach a lesson or two on how to inflate their spending to create a rationale for a bigger block grant.

The model will be recalibration next in 2016, but the 2013-14 budget gave school districts a $26 million ECA and then some. Legislators added a $12 million salary increase and a $14.6 million contribution to the retirement system, both outside of the block grant funding model, for a total increase in salaries, benefits and materials costs in the K-12 system of $52.7 million.

Did this satisfy the school districts? Of course not. Like the gastrointestinal bubbling created by certain foods, a coalition of school district superintendents is back asking for more. But while one committee, the Joint Education Committee (JEC) was happy to give it to them, the Joint Appropriations Committee (JAC) gave them an antacid instead.

This was primarily due to the disconnect between this horde of cash and the desire for more money.

During the October 2014 JAC committee meeting, school district superintendents said they need more money now for higher teacher salaries to attract staff. Representative Tim Stubson pointed out that Sublette SD #1 is spending $669,000 less on salaries than what it has appropriated under the model and at the same time, has cut positions. "Part of the disconnect I feel," Rep. Stubson said, "is we see a cut in positions but you are not even spending what is allocated under the model." He asked, "Where is that disconnect coming from?"

Sublette County SD #1 Superintendent Jay Harnack responded, "Our salary schedule is higher than the salary funded, salaries are high because the cost of living is high so they must pay more to attract good people and so we fund fewer positions because we pay higher than the model rate."

Undeterred by this non answer, Rep Stubson said, "Once you take the higher salary into account and count the lower number of people … the model gives you $669,000 not being used for salaries. I don't understand that disconnect."

Mr. Harnack's response? "My business manager could not be here today."

In other words, even though school districts have money to pay higher salaries, they aren't and they don't know why. Meanwhile they are cutting teacher positions and yet they want more money.

Representative Stubson wasn't the only legislator questioning apparent disconnect between what school districts have horded away and their desire for more.

Senator Eli Bebout pointed out that Sublette SD #1 holds 35 percent of its general fund dollars in cash reserves. "Why is it so high?" he said. "You are one of the highest in the state. Seems to me that if you are having these difficulties, recalibration is coming up, you would utilize these funds."

Mr. Harnack responded by saying that they held 15 percent in cash reserves because some is set aside for emergencies and opening a new alterative school.

That didn't explain why they are holding 35 percent of their general fund in cash reserves, but I digress.

Senator Bebout also pointed out the disconnect between teacher salaries and the purported inability to attract staff.

"If you look at South Dakota and Utah, and you can offer $10,000 more per year starting salary," he said, "and your average is $10,000 more per year for teachers in the system, [teachers] must not be coming to Wyoming because money is not important? I've been chewed out by Colorado because of the amount of money we pay our teachers."

Sen. Meier said it best when wondering out loud whether they were "getting the cart before the horse" by giving an ECA now with recalibration around the corner. "I look at the way the districts spend the model, and I'm all in favor of local control, but the operative word of the day is disconnect. There is so much disconnect between the way you guys spend money and the way we give you money …. I'm not seeing the basis for an ECA."

The JEC was happy to increase the school district ECA by another $20.3 million, but as a result of these disconnects, the JAC cut that back to an increase of roughly $6 million. Although the JAC rejected most of the JEC's recommendation for more school district spending, the legislature must get tougher. With never ending demands for more with no apparent need, it is time for the legislature to rein in inflated spending.