Final 2018 Monitoring Report – October 2018

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Final 2018 Monitoring Report – October 2018 MON ITORING THE COST-BASIS OF THE K-12 WYOMING FUNDING MODEL Prepared by the LSO Budget and Fiscal Section Prepared for Joint Education Committee & Joint Appropriations Committee October 2018 Monitoring the Cost-Basis of the K-12 Wyoming Funding Model JOINT EDUCATION COMMITTEE MEMBERS Senator Henry H.R. "Hank" Coe, Co-Chairman Representative David Northrup, Co-Chairman Senator Affie Ellis Senator Stephan Pappas Senator Chris Rothfuss Senator Jeff Wasserburger Representative Debbie Bovee Representative Landon Brown Representative Jamie Flitner Representative John Freeman Representative Mark Kinner Representative Jerry Paxton Representative Garry Piiparinen Representative Evan Simpson JOINT APPROPRIATIONS COMMITTEE MEMBERS Senator Bruce Burns, Co-Chairman Representative Bob Nicholas, Co-Chairman Senator Dan Dockstader Senator Ogden Driskill Senator John Hastert Senator Bill Landen Representative Donald Burkhart, Jr. Representative Lloyd Larsen Representative Andy Schwartz Representative Albert Sommers Representative Tom Walters Representative Sue Wilson LEGISLATIVE SERVICE OFFICE STAFF Matthew Willmarth, Senior School Finance Analyst October 2018 i LSO BUDGET AND FISCAL SECTION • 200 West 24th Street • Cheyenne, Wyoming 82002 TELEPHONE (307)777-7881 • FAX (307)777-5466 • E-MAIL [email protected] • WEBSITE www.wyoleg.gov Monitoring the Cost-Basis of the K-12 Wyoming Funding Model Table of Contents Monitoring Report History ........................................................................................................................... 1 2018 Monitoring Report ............................................................................................................................... 2 Statutory Model vs. Evidence-Based Funding Levels ............................................................................... 2 Non-Personnel (Educational Materials and Utilities) .............................................................................. 4 Professional and Non-Professional Personnel ......................................................................................... 5 External Cost Adjustment ......................................................................................................................... 5 Appendices Appendix A – Monitoring Labor Market Cost Pressures “Current Status of Cost Pressures on Teacher Salaries in Wyoming,” September 2018, Dr. Christiana Stoddard, Wyoming Legislature Consultant Appendix B – Monitoring Labor Market Cost Pressures “Labor Markets for Non-Teachers Employed by K-12 Districts in Wyoming,” September 2018, Dr. Christiana Stoddard, Wyoming Legislature Consultant Appendix C – Wyoming Department of Education Use of Resources Report “Continued Review of Educational Resources in Wyoming (CRERW), FY 2007-08 through 2017-18 (Preliminary),” September 27, 2018, Kim Morrow, Wyoming Department of Education October 2018 ii LSO BUDGET AND FISCAL SECTION • 200 West 24th Street • Cheyenne, Wyoming 82002 TELEPHONE (307)777-7881 • FAX (307)777-5466 • E-MAIL [email protected] • WEBSITE www.wyoleg.gov Monitoring the Cost-Basis of the K-12 Wyoming Funding Model MONITORING REPORT HISTORY The 2010 recalibration effort and subsequent enabling legislation in the 2012 Budget Session, resulted in the Legislature adopting a monitoring process developed by the Legislature’s school finance consultants. Pursuant to W.S. 21-13-309(u), the Legislature receives information to monitor the cost pressures on both the statutory and evidence-based K-12 funding models and to determine the appropriateness of application of an inflationary adjustment via an external cost adjustment (ECA).1 This monitoring process developed by the Legislature’s consultants uses readily available state, regional and national data as part of a set of relatively simple, understandable indicators of cost pressures. These indicators are to be viewed collectively when used by the Legislature for policy making decisions. The indicators are not to be considered in isolation of one another as individual indicators nor are they intended to be seen as definitively signaling any degradation of the cost-basis of the statutory model. The following core principles guide this process: 1. Cost pressures are identified when indicators show changes relative to previous levels, and trends are best identified when there are broad based changes in several measures; 2. All indicators have some transitory year-to-year variation and as such, the process seeks high quality data series that are consistent over time; 3. As new data collections are developed and become available, it is important to retain enough consistency with former measures to enable tracking of evolving trends in market conditions; 4. Changes in supply and demand conditions and changes in district outcomes are monitored; and 5. If several indicators reflect deviations from historical ranges, the process invokes the collection of a deeper set of cost data to confirm the presence of cost pressure. The monitoring process includes review of four cost indices, one for each of the following model categories: professional staff resources, non-professional staff resources, utilities and educational materials. The monitoring process also incorporates by law the annual report produced by the Wyoming Department of Education (WDE) based upon resource utilization patterns of school districts in comparison to statutory model-generated resources, as initiated by state consultants following the 2005 recalibration efforts. Note: The September 2018 version of this report has been updated in the October 2018 version to account for 1) updated health insurance amounts for school year 2019-20; 2) fourth quarter 2017 Wyoming Cost-of-Living Index (WCLI) data from the Department of Administration’s Economic Analysis Division, using fourth quarter 2017 as a proxy for second quarter 2018; and 3) revised U.S. Bureau of Labor Statistics data for April 2018. The impact of the updates on the statutory model for school year 2019-20, when compared to the September 2018 estimates, is an estimated decrease of $20.8 million for the health insurance component and an estimated increase of $1.2 million for the WCLI update, resulting in an estimated net reduction of $19.6 million. 1 While the Legislature performed a recalibration of the education resource block grant model during the 2017 interim, the recommendations from Augenblick, Palaich and Associates (APA) are not considered in this analysis for two principal reasons. First, the statutory model uses the evidence-based model as a framework of its funding formula, not APA’s recommendations. Second, not all of APA’s recommendations were fully developed and modeled. For example, APA did not complete its recommendation to develop a transportation density formula, which would have determined transportation funding levels. Accordingly, the LSO would have to exercise significant judgment to complete APA’s model for analysis in this report. October 2018 1 LSO BUDGET AND FISCAL SECTION • 200 West 24th Street • Cheyenne, Wyoming 82002 TELEPHONE (307)777-7881 • FAX (307)777-5466 • E-MAIL [email protected] • WEBSITE www.wyoleg.gov Monitoring the Cost-Basis of the K-12 Wyoming Funding Model 2018 MONITORING REPORT The 2018 monitoring process utilizes similar information from prior reports: • Comparing funding allocations between the statutory model and evidence-based model from school year 2006-07 to estimated school year 2019-20; • Monitoring the cost-basis of components comprising the non-personnel categories by observing the convergence of the statutory model and the evidence-based model as adjusted by the appropriate cost index; • Monitoring the cost-basis of teacher salaries by utilizing the expertise of Dr. Christiana Stoddard to evaluate readily available labor market data (Appendix A); • Monitoring the cost-basis of non-teacher salaries by utilizing the expertise of Dr. Christiana Stoddard to evaluate readily available labor market data (Appendix B); and • Reviewing the resource utilization patterns of school districts in comparison to statutory model- generated resources (Appendix C). Each section below updates information previously provided in prior reports with current year information. STATUTORY MODEL VS. EVIDENCE-BASED FUNDING LEVELS Comparisons of the evidence-based funding levels and statutory funding levels for school years 2006-07 to estimated school year 2019-20 are illustrated in Table 1. The table can also be viewed graphically in Figure 1. Table 1. Evidence-Based Funding Levels Compared to Statutory Funding Levels. Evidence-Based Model Evidence-Based School Year Recalibration Year Model Statutory Model Difference 2006-07 2005 $974,384,621 $1,043,521,790 $69,137,169 2007-08 2005 $1,051,584,249 $1,126,991,003 $75,406,754 2008-09 2005 $1,114,929,855 $1,198,670,825 $83,740,970 2009-10 2005 $1,166,146,943 $1,252,956,891 $86,809,948 2010-11 2005 $1,206,491,760 $1,283,409,749 $76,917,989 2011-12 2010 $1,242,191,617 $1,345,435,177 $103,243,560 2012-13 2010 $1,282,008,100 $1,377,282,350 $95,274,250 2013-14 2010 $1,302,879,403 $1,390,441,588 $87,562,185 2014-15 2010 $1,343,025,593 $1,429,884,730 $86,859,138 2015-16 2010 $1,402,355,064 $1,494,415,878 $92,060,814 2016-17 2015 $1,470,805,562 $1,512,344,463 $41,538,901 Est. 2017-18 2015 $1,479,697,430 $1,482,599,811 $2,902,381 Est. 2018-19 2015 $1,489,300,000 $1,489,200,000 ($100,000) Est. 2019-20 2015 $1,500,400,000 $1,480,000,000 ($20,400,000) Source: LSO analysis and calculations. Several assumptions are made by the
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