Reverses proposed education cuts
FRANKFORT, Ky. (March 16, 2016) — A state budget plan that would reverse proposed funding cuts for K-12 education programs and state colleges and universities while fully funding the state’s recommended contributions to its ailing public retirement systems has cleared the House budget committee.
House Bill 303, sponsored by House Appropriations and Revenue Chair Rick Rand, D-Bedford, and passed by the committee on Tuesday night, would maintain per-pupil funding for education (known as SEEK) as proposed by Gov. Matt Bevin in the state’s next $21 billion two-year state budget while restoring cuts proposed by the governor to several K-12 services including family resource and youth service centers (FRYSCs) and preschool, Gifted and Talented and more. Proposed budget cuts for colleges and universities were also struck by the committee, as was a provision that would base future funding on a college or university’s performance.
Cuts of 4.5 percent this fiscal year and 9 percent over the next biennium—known as “budget stabilization reductions”—proposed by Bevin for most other state government agencies were retained in the House bill with some exceptions: Constitutional offices like Secretary of State, the state Treasury and Attorney General slated for budget stabilization cuts over the biennium have their funding restored in the House plan, as do the Department of Veterans’ Affairs, the Executive Branch Ethics Commission and a handful of other agencies.
As for pensions, HB 303 would appropriate around $1 billion over the biennium to meet the actuarial required contribution, or ARC, for the Kentucky Teachers’ Retirement System without using bonding. It would fund the Kentucky Retirement Systems’ state employees’ nonhazardous pension plan at Bevin’s recommendation of the ARC of $60 million in the first year and around $70 million in the second year of the biennium plus an extra $44.7 million in each of the next two fiscal years.
Bevin has proposed funding the ARC plus the additional $90 million or so over the biennium for the state employee system with help from what are called “contingent appropriations,” which are contingent upon revenues that exceed certain budget expectations. He also proposed using those same type of appropriations to help fund KTRS pensions, and recommended transferring $500 million over the biennium from the state public employees’ health insurance fund to a “permanent fund” to help secure future pensions. The permanent fund is not included in the House proposal.
Absent from the House plan is a $100 million bond pool for workforce development proposed by Bevin. HB 303 would, however, provide over $32 million over the biennium for a proposed Work Ready Kentucky Scholarship Program for community college students and provide a funding mechanism to provide state need-based college scholarships to another 35,000 students.
HB 303 agrees with Bevin’s proposal to provide raises for state social workers, corrections workers and Kentucky State Police Troopers. It would also beef up salaries for the state’s Commercial Vehicle Enforcement officers.
A summary of HB 303 provided to the House budget committee before it approved the bill Tuesday night states that the House budget plan carries less debt than Bevin’s plan. Total debt in Bevin’s plan, according to the summary, is $624.6 million, $460.2 million which would be supported by the state. HB 303 would reduce that proposed debt to $548.6 million, with $384.2 million supported by the state General Fund, with $283 million left in the state rainy day fund at the end of fiscal year 2018.
HB 303 emerged from the House budget committee with the support of most House Majority members. Most if not all members of the House Minority members on the committee passed on their vote on HB 303 in committee, with many saying that they agreed with parts of the bill but needed more time to review the proposal.
Rep. Steven Rudy, R- Paducah, who has filed a floor amendment that would make several changes to HB 303, said in committee that he is pleased HB 303 doesn’t propose bonding to fund pensions.
“That seems like an easy fix but I think the governor made it clear—he’s not going to sign any bill with bonding, borrowing from the future, and I really appreciate you guys refusing to give in to that temptation,” said Rudy.
Rand said that while HB 303 would adopt many of the cuts and supports proposed by Bevin it also would set “a few goals” that he said he believes HB 303 can meet.
“They are (to) invest in education, and this budget would invest in education heavily; to pay 100 percent of the (pension) ARC, and this budget will pay 100 percent of the ARC; that it will lower debt below what the governor has proposed, and it will have the highest Budget Reserve Trust Fund in the history of the Budget Reserve Trust Fund—this budget will contain all of those,” said Rand.
HB 303 is expected to be brought to the House floor for a vote by all members this afternoon.