Teton County will send an estimated $22 million in property tax revenue — a marked increase over last year — to the state for the 2021-22 school year as part of the state’s school foundation block grant program.
For many Teton County homeowners and landowners, skyrocketing property values have increased their property tax bills, which help fund schools.
“I feel really sorry for the people that live in Jackson and are on a fixed income,” school board Trustee Janine Bay Teske said. “The assessed valuation keeps going up and up and up and up.
“How many of them are going to be able to afford to stay in their house based on their fixed income and their property taxes increasing?”
A chunk of that money feeds into Wyoming’s school foundation program, which uses a complex model to dictate an equal funding level across school districts. The goal is to provide an equitable education, no matter a district’s socioeconomic situation.
Property taxes, railroad fees, the rainy day fund and other sources support the guaranteed amount, which was more than $1.5 billion in the last school year. Property owners pay 43 mills toward schools; 12 go directly to the state, and 31 are collected at the local level.
If districts collect more in revenue than they are guaranteed, they send the excess to the state in a process called “recapture.” Those whose revenue falls short are called “entitlement” districts, and the foundation program covers the gap.
Teton County School District No. 1 is one of the state’s few recapture districts. At the same time it is seeing an increase in its recapture obligation, many counties that have sent money back for years are experiencing the opposite.
Historically, counties rich in oil, gas or coal had high property tax revenues. Campbell County, for instance, has been a recapture district for nearly four decades, sending nearly $1 billion to the state since 1984, representatives told WyoFile.
That led to the recapture program contributing roughly 35% of the funding for the school foundation program in the 2009-10 school year, the highest at any point in the past 13 years. Roughly $424 million was recaptured, including Campbell County’s contribution of $117 million and the two Sublette County districts throwing in a combined $189 million.
From that high, the annual recapture amount has steadily decreased, hitting a low of $40 million in the 2017-18 school year. Last year, the state recaptured roughly $99 million, which covered 6.6% of the overall foundation program.
Of that, Teton County contributed $14 million. Rising property values will drive that number to an estimated $22 million for the 2021-22 school year, though the complexity of the model means other factors like changes in attendance may also have an effect.
Wyoming Department of Education Chief Operations Officer Trent Carroll isn’t necessarily concerned with the decline in the recapture funds, which he attributed to the volatility in minerals.
“Recapture is really, in my opinion, just one mechanism in our school funding formula,” he said. “Yeah, that does ebb and flow with the valuation of minerals, but whatever revenue is not generated locally and is not recaptured has to come from somewhere else.”
It’s unclear whether the decline in recapture funds will be exacerbated in the next few years. Teton County school board trustees say they expect local contributions to increase, but the number of recapture districts may continue to drop, potentially to just three or four.
Despite the massive shift in recapture as a revenue source over the past few years, state Education Department officials aren’t sure what the future holds and whether commodity prices and tourism will drive some economic activity.
“Hopefully things continue to stay strong, but they can change quickly and unpredictably,” Carroll said. “It’s virtually impossible for us to know what that looks like, even for this next school year.”
In Teton County, 78% of the property tax revenue collected goes to the state for schools. Because of the lack of minerals extraction, individual property owners bear the brunt of that, including teachers and staff at the school district. Local school board members say that in the face of rising recapture funds they worry most about potential changes to the state’s cost of living adjustment that boosts the salary of Teton County teachers.
The funding model sets a base salary that accounts for certification and years of experience for teachers. Districts with high rents and home prices receive an adjustment above that; Teton County has the highest in the state at 59%.
Wyoming legislators have debated the idea of changing that adjustment to save money. Were that to come to pass, it would hamper the district’s ability to keep employees.
“Teton County is sending a lot of property tax money back to the state for redistribution,” Teske said. “I truly appreciate how that helps other districts, but I hope they don’t come back and say, ‘Hey, you don’t really need a 59% regional cost adjustment.’ ”
Shrinking recapture funds also put stress on the education funding debate that has been happening over the past couple of years, highlighting the difficulties of paying for schools as coal, oil and gas revenues diminish. Wyoming has for years spent more per student than many states, but that level of spending was predicated on the strength of minerals.
Now, legislators are debating cost-saving moves like changing the regional cost adjustment. Right now, it combines two labor cost indices, the Wyoming cost of living index and the hedonic wage index, which is lower. Lawmakers have considered using only the hedonic index, though school board trustees say they would fight that particular move.
“If they go to the hedonic index, Teton County schools will have to take a serious look at taking appropriate action, probably in the courts,” Trustee Bill Scarlett said.
The other potential route would be raising revenue at the state level to offset the reduction in recapture funds. Though that wouldn’t ease the property tax burden on Teton County taxpayers, it would provide longer-term security against the volatility of recapture funds.
That could only happen at the Legislature, Carroll said. So far, legislators have not agreed on the right path forward.
Rep. Andy Schwartz, D-Teton, has proposed several bills to raise funds, though none have made it through. He predicted disastrous effects if the state can’t create new sources of revenue.
“What you’re talking about is laying off a lot of people, and that has a ripple effect through communities and can be pretty devastating,” he said.
Beyond that, there’s a philosophical question to be answered about serving Wyoming students.
“The issue is do we want to provide a good education?” Schwartz asked.