Wyoming’s state agency budgets are being cut by $248 million over the next two years due to falling energy revenue, according to an announcement Gov. Matt Mead made on Tuesday. Mead told lawmakers in Cheyenne that the sharp declines require cutting the $3 billion state general fund budget that legislators approved earlier this year.

This announcement will place the University of Wyoming in financial crisis mode in the coming months as the university seeks to cut programs and positions to make up for the $19 million cut.

Northwest College also is preparing for its $1.3 million share of a $20 million budget cut to the state’s community college system, consisting of seven community college districts and the Wyoming Community College Commission.

“These are the numbers we’re already working with,” NWC President Stefani Hicswa said Tuesday evening.

However, Hicswa said she still is waiting for final numbers for state valuation, Workers Compensation Insurance and other information needed to finalize the college’s budget for fiscal year 2017, which begins July 1. 

“Reductions of this magnitude are difficult, painful and have far-reaching consequences to both the private and the public sectors,” Mead said. “There are no easy answers, and no easy process to address the situation.”

Mead also warned that more cuts could be required because it’s possible the revenue shortfall ultimately could exceed $500 million.

Wyoming has seen the loss of about 5,500 jobs in the oil, gas and coal industries over the past year and there could be further declines in energy sector employment, Alex Kean, administrator of the state’s Economic Analysis Division, told members of the Legislature’s Joint Appropriations Committee after the announcement by Mead.

Kean is co-chairman of the state Consensus Revenue Estimating Group, a panel of state financial experts who predict future revenues. Mead warned state agencies in April to brace for the budget cuts after the group warned of falling revenue projections.

Mead’s budget cuts would include laying off seven employees and removing scores of vacant positions from agency rolls. The layoffs would include three positions at the Attorney General’s Office, three from University of Wyoming Medical Education Program and one from the Wyoming Department of Health.

Wyoming had 8,566 employees as of Dec. 31, not counting workers at UW or community colleges.

On June 15, the University of Wyoming Board of Trustees approved a budget that will reduce ongoing spending by about $19 million and internally reallocate about $6 million in one-time funding during the coming fiscal year.

“We have been aware of this (state funding cut) for over a month; the governor told us that is how much we will have to cut,” UW spokesman Chad Baldwin told the Powell Tribune. “It’s a complicated process, but basically it is $35 million over the biennium.”

The trustees also approved having President Laurie Nichols find ways to cut and restructure programs to save at least an additional $10 million for the following fiscal year.

“We have managed to avoid program cuts and layoffs in the fiscal year that begins next month, but those types of reductions will be unavoidable in the following year,” Nichols said in a press release from UW. “With the initial round of cuts approved, we’ll now move forward with a fair and open process to tackle the second round — with a continuing commitment to student success, quality programs and excellence in research and service to the state.”

Nichols told the Tribune last month that many of this year’s cuts will be considered temporary. Then, during the coming school year, Nichols and her administrative team will take a much closer look at the university, its programs and its budget and determine where more permanent, strategic cuts can be made. 

Who's getting cuts

The Wyoming Department of Health is the state’s largest agency and faces $90 million in cuts from its $975 million state funds budget. Mead said those cuts also will result in the loss of $41 million in federal matching funds and likely the loss of 677 private-sector jobs.

Cuts to Health Department programs include $6.7 million from development and disability preschools, $4.6 million from behavioral health and $1.3 million in reduction to senior programs, Mead said.

Mead reminded members of the Legislature’s Joint Appropriations Committee that lawmakers had rejected his recommendation to accept federal funds to expand the Medicaid program — a move that would have offered insurance coverage to roughly 20,000 low-income adults.

State studies estimate that expanding the program would have saved the state about $30 million in the coming biennium by reducing pressure on other health programs.

“The cuts we make now are necessary. Had we expanded Medicaid, we would still be making cuts, but I believe the cuts would not be to the degree they are now,” Mead said.

Many Wyoming legislators have said they oppose Medicaid expansion because they don’t trust federal promises to continue to pay the bulk of program costs. The expansion is a key element of the federal Affordable Care Act.

Other agencies facing large cuts include:

• Department of Corrections, $17.4 million

• Department of Family Services, $13.9 million

Mead said he’s requiring delays on some planned state construction projects, including expansion of the state’s medium-security prison in Torrington and a new state office building in Casper.

Wyoming has more than $1.5 billion in its rainy day fund, but Mead said state law prohibited him from accessing that money. He said that if lawmakers disagreed with his approach to budget cuts, they were welcome to convene for a special legislative session and take a different approach.

State lawmakers have said they want to limit expenditures from the rainy day fund to about 10 percent a year to cover what some experts have predicted could be a decade-long downturn in energy markets.

UW set to declare financial crisis

Nichols plans to present the reductions to the trustees in September. To accomplish that, she will declare a financial crisis under university regulations, triggering a process that will involve a university-wide meeting and consultation with a committee composed of administrators, faculty and staff members.

“The reductions include eliminating 70 vacant positions, standardizing the workload for the faculty to save $2.5 million, and (UW) provided an incentive for people to retire to save $3 million and we are not going to have any more part-time positions,” Baldwin said. “They will be half-time or less, that saves on benefits because if they are over half-time then you have to pay benefits. Those are the big things.”

For the biennium that begins July 1, UW faces a loss of nearly $41 million in state funding. In addition, the university needs to reallocate dollars internally to cover costs related to a new financial and reporting system, increased utility expenses and other needs. For the biennium, that brings the total of necessary reductions to more than $50 million.

The budget approved June 15 for the coming fiscal year includes a total of $7 million in cuts based on allocations given to campus units when the Legislature mandated a 1.5 percent reduction during the 2016 session — and as a result of a need for internal reallocations.

Nichols says she doesn’t intend to declare a financial exigency, which denotes a financial crisis so severe that the termination of positions held by tenured faculty members is required. Before submitting such a request, she would have to inform the Financial Crisis Advisory Committee.

“I believe there are actions UW can take when reducing or eliminating programs to avoid a recommendation of financial exigency,” Nichols said in a press release. “The declaration of a financial crisis is different than a recommendation to declare financial exigency. The declaration of the former does not mean that the latter is a foregone conclusion — far from it.”

No decisions have been made about reducing or eliminating specific academic programs, Nichols said. But the program review process that began this spring is continuing, focused on undergraduate programs with fewer than 25 graduates over a five-year period, and master’s degree programs with fewer than 15 graduates over a five-year period.

Additional review will be performed on undergraduate programs with 25-50 graduates over a five-year period, and master’s degree programs with 15-25 graduates.

“We will see significant program reductions and job cuts, but won’t nail those down until October,” Baldwin said.

Cuts identified so far at Northwest College total just over $2.36 million, reducing the college’s budget from nearly $22.67 million in FY 2016 to just under $21.85 million for FY 2017.

Included in those cuts were 19 early retirements — three through the annual early retirement process, and 16 through a special early retirement offer approved in April by the NWC Board of Trustees.

Some of those positions, as well as previously vacant ones, will not be filled. Others will be filled with new, less-experienced employees at lower salaries.

In addition, three low-attendance programs — journalism, film/radio/television and farrier business — were terminated. Those programs will be taught out during the coming year for 13 current students. 

A previous Tribune story with more information about NWC’s budget-cutting process is available at tinyurl.com/NWCbudget.

(The Associated Press contributed to this article.)