Part three of an ongoing series (Part 1, Part 2)

Oil prices dropped even further to $45 per barrel on Monday, less than half their value a year ago.

That means fewer jobs in Wyoming — and also leads to less funding for schools and lower demand for housing.

Impact on schools

Oil and gas revenues provide a large portion of the revenue for Wyoming’s schools, but the decrease in oil value is not anticipated to have much of an impact for Park County School District No. 1, said Superintendent Kevin Mitchell.

“In the short-term, it isn’t going to affect us at all,” Mitchell said. “If there is continued decline in revenue statewide, then certainly the state will have to make some decisions.”

In Wyoming, every school district is guaranteed a certain amount of state funding each year. The state makes up the difference for what local funding doesn’t provide, since recapture districts such as Pinedale and Gillette give money to the state, which is then spread out to all the schools.

Right now, the funding model for state schools is going through recalibration — which occurs every five years.

Deciding if Wyoming educators’ wages are adequate or need to be increased is one of the big topics for the  Legislature’s Joint Education Interim Committee, Rep. David Northrup said.

About 80 percent of the Powell district’s budget is for personnel, Mitchell said.

The committee took testimony and input from consultants and is anticipated to make its first round of decisions on Friday.

“The court says we have to find the money; it doesn’t matter if we run out,” Northrup said. “The state will come up with the money to make education equal to every child.”

In the past, those funds were supplemented from the general fund or from water development funding.

“If the state is in a bind everyone should help, and I don’t know that education should say ‘You can’t touch us and cut everyone else,’” Mitchell said. Once the Education Committee completes the recalibration, the Powell school district’s budget will be adjusted, beginning next year, to reflect those changes.

Wyoming’s schools have been told their funding is fine for the next year, Mitchell said.

“Right now we aren’t concerned, but we are keeping an ear to the ground, and our funding is set for next year,” he said.

Powell’s schools are anticipating a drop in local revenue, but the state will make up the difference. 

“We know we are going to have a decline in local resources,” Mitchell said.

The Supreme Court requires the state to provide a “quality and equitable education.”

“If the evidence says this is what it costs (to meet those requirements), then I don’t know what the state will do to pay for what they have to pay for,” Mitchell said.

Funding for schools will be found and state departments and other state funded entities will be asked to take cuts so the state’s budget can remain balanced, Northrup said.

“We know we have to come up with the money and will have to rob from an account somewhere,” Northrup said. “We don’t spend more money than we have.”

School construction is the other piece of the state funding that shouldn’t impact Powell because it is funded by coal lease money, Mitchell said.

“That money is drying up fast — that fund is more worrisome to schools,” Mitchell said. “We aren’t complaining, because we are finishing our last school and have the money for it.”

If funding is cut from the school district, the school board would look at how they are spending funds, he said. The state Legislature will make the final decision on how the funding model will function, and it is possible they could cut school funding in preparation for the impact from dropped oil value.

When the school account runs out, there is a carrying balance of $100 million and that is the first place the state would go to make sure the bills are covered, Northrup said. After that, the permanent land fund has $500 million.

For now, it’s a waiting game to see what will happen with oil revenues, Northrup said.

“Education will continue on, it will be paid for,” Northrup said. 

Housing holding strong

This is not the first time oil has decreased abruptly, and lessons from the past can be applied to the present. In the 1980s, Big Horn Basin’s oil went from selling for $29.46 on average in 1982 to $11.31 per barrel.

Fewer jobs in the oilfield means fewer families living in the community — and that impacts housing.

Retired Powell real estate agent Wes Metzler was still in the real estate business when the 1980s bust occurred and he said it had a “huge impact,” but believes this time around will be different.

“The real estate market got tough in the 80s, but it wasn’t overnight,” Wes Metzler said.

The local housing market is likely to flatten out following years of inflation, Wes Metzler said, noting that inflation has been felt across the board for everything from groceries to housing.

It takes about a year or a year-and-a-half for the impact on the housing market to be felt locally, Wes Metzler said.

So far there has not been an effect on the housing market, said Bill Metzler, associate broker at Metzler and Moore in Powell.

“The market is still very strong,” Bill Metzler said. “Typically we are a year behind on what happens nationally, so we don’t know if we will have some effect on down the road. There is no way to know it. But, with the state’s money declining, that may have some effect on housing in Wyoming.”

When the oil market took a dive in the 1980s, housing prices declined slightly in the Powell area but realtors saw it as “more of a correction in prices,” Bill Metzler said.

“There were a few foreclosures — the market just got real tight,” Bill Metzler said.

The impact wasn’t just on houses, the Amoco office building was vacated and sold to Park County, Wes Metzler said. About 50 people had jobs in that office building at the time, and those positions were either eliminated or moved to Texas.

There is a lot of energy-related employment in the Big Horn Basin, but the workers may not work locally, he said. Some may have a residence in Powell, but work in Alaska or North Dakota.

Unlike other parts of Wyoming, the Big Horn Basin has a more diversified economy with agriculture and Northwest College to help balance out impacts, Wes Metzler said.

“We are kind of a different situation than Rock Springs in that our employment isn’t fluctuating like it is down there,” Bill Metzler said.

Another saving grace for Wyoming is the draw for retirees, according to both of the Metzlers.

“We are seeing more older people,” Bill Metzler said. “Forbes magazine ranks Wyoming as one of the top three or four for wealth-friendly states because of the low property taxes and low sales taxes and clean air and no income tax. We even see people move down from Montana to retire and not pay taxes on their retirement.”

Currently, home construction remains “fairly strong,” and construction companies are keeping busy building new homes, Bill Metzler said.