CHEYENNE – Lawmakers held preliminary discussions Tuesday in Casper regarding legislation that could transfer funds to an account used for capital construction and major maintenance needs for school districts statewide.

With the decline of federal coal lease bonus revenues, the challenge for state legislators and local school administrators has been to find revenue to fill that gap for building projects.

In recent years, lawmakers have broadened revenue sources for K-12 school capital construction by directing investment income to a school major maintenance account and depositing one-third of state royalties on school lands to a mineral royalties account. But the Legislature will still have some work to do during its next session.

Matthew Willmarth, senior school finance analyst with the Legislative Service Office, told members of the Select Committee on School Facilities on Tuesday in Casper there is no mechanism to transfer those funds to the School Capital Construction Account. That would require legislation or a budget bill footnote, he said.

In addition, he said, state royalties on school lands are accrued throughout the fiscal year, but the entire revenue is not received July 1, which is when the fiscal year starts.

Investment income is generally not calculated until up to 90 days after the end of the fiscal year, and that creates a cash flow problem, Willmarth said.

“The Capital Construction Account has been blessed with significant cash flow,” Willmarth told lawmakers. “As we go into the future, with little to no coal bonus revenues and no transfers from the School Foundation Program Account, the Capital Construction Account cash flow is constrained.”

He added that “no longer will you have those state royalties be continuously deposited into the School Capital Construction Account. They’ll be put into a separate account.”

Willmarth told lawmakers they could explore the possibility of depositing revenues directed to new accounts created by lawmakers to the School Capital Construction Account or require an automatic transfer upon receipt of the funds to the SCCA.

He also told lawmakers that the future cash balance of the SCCA will be substantially less than it has been the past 10 years. It could require interfund borrowing or timely deposit of these revenues to make required payments.

The Wyoming Tribune Eagle was monitoring the meeting in Casper online Tuesday, and lawmakers’ comments could not always be clearly heard. But it appeared that lawmakers came to a consensus to task Legislative Service Office staff with crafting a draft bill for consideration during the committee’s meeting next month.

The issue of construction and major maintenance funding is especially relevant in Laramie County School District 1, as a 2017 education facility condition index showed that 11 schools in the district were among the 20 oldest facilities statewide. Ten of those LCSD1 buildings are elementary schools, and the 11th is Carey Junior High, which will be replaced by a new facility currently under construction in east Cheyenne.

Background on funding sources

Prior to the fiscal year 2019-20 biennium, traditional revenue sources for school construction and major maintenance projects consisted of federal coal lease bonuses, state mineral royalties on school lands and federal mineral royalties.

But coal lease bonuses deposited into the state’s School Capital Construction Account have dramatically decreased in recent in years. In fiscal year 2017, coal lease bonuses deposited into that account totaled about $111.3 million. In fiscal year 2018, that amount plummeted to about $5.3 million.

With that decline, the state Legislature recently modified revenue sources for school capital construction, including increasing available state mineral royalties on school lands and dedicating a portion of investment income from the Permanent Wyoming Mineral Trust Fund, also known as PMTF.

In the 2018 budget session, state lawmakers guaranteed 45% of the maximum earnings that could be directed to the Strategic Investments and Projects Account, also known as SIPA, from the PMTF to the newly created School Major Maintenance Subaccount beginning in fiscal year 2021.

In the 2019 general session, lawmakers further amended the PMTF spending policy to guarantee maximum earnings that could be directed to the SIPA from the PMTF from funds available in the PMTF Spending Policy Reserve. The 45% directed to the School Major Maintenance Subaccount was unchanged.

According to state officials, revenue directed to the School Major Maintenance Subaccount for the fiscal year 2021-22 biennium is an estimated $88.7 million.

During the 2018 budget session, lawmakers amended state statute to distribute the one-third of state mineral royalties received from leases on any school lands to the SCCA for the fiscal year 2019-20 biennium. Previous to the amendment, only up to $8 million in any one year was distributed to the SCCA, and the excess amount was distributed to the Common School Account within the Permanent Land Fund.

According to the Consensus Revenue Estimating Group, the estimated increase in revenue for each fiscal year is $42 million, for a total of $50 million in state mineral royalties.

However, for fiscal year 2019, a July revenue update indicated the actual revenue collected was about $3.5 million lower than forecast.

Steve Knight is the Wyoming Tribune Eagle’s local government reporter. He can be reached at 307-633-3182 or sknight@wyomingnews.com.

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