School Finance (agency 205) presented priority one — entitlement payments — and the department reported an overall negative adjustment of $128,214,635 driven by stronger local revenue estimates and the inclusion of high‑end scenarios for residential property tax relief in the department’s standard budget.

Director Richards and LSO analysts said the department aligned estimates with the October 31 Craig forecast but cautioned that the January Craig forecast, updated enrollment data and the recalibration bill remain material — and could change the picture. LSO warned that layering recalibration and an assumed ECA (effective county adjustment) onto the governor’s recommendations could make the School Foundation Program go negative in the 2027–28 biennium and require an automatic transfer from the LSRA; the department said it has not historically had difficulty repaying such transfers when they occurred.

Committee members asked about recapture districts and the effect of residential property‑tax relief. LSO senior school finance analyst Matt Wilmar identified Teton County School District No. 1 as a recapture district, with estimated recapture around $60 million this school year (down from about $80 million the prior year). Wilmar said that accounting reflects the 25% exemption, the 4% cap and the long‑term homeowner exemption that were included in last session’s tax relief measures.

School Finance also highlighted operational levers the legislature may need to consider if recalibration increases program costs: enrollment changes, energy‑related revenue volatility (oil, gas, coal), and the timeline and disposition of recalibration and ECA policy decisions. Director Richards said the budget bill will present the standard model and recalibration will be handled in a parallel bill with its own appropriation "so the timing on those won’t work well" to be merged.

The committee requested that the agency provide updated letters and profiles in January reflecting enrollment updates and the January Craig forecast so JAC can assess final appropriations and potential LSRA transfers.