Kansas Center for Economic Growth "Option Four" Plan

KCEG to host joint press conference, present "Option Four" plan

From Annie McKay, Kansas Center for Economic Growth Executive Director

As an advocate for responsible budget and tax policy and the work of the Kansas Center for Economic Growth, you understand the impact today's investments have in shaping our state's future.

As you've probably read in the news, Kansas once again faces another significant budget crisis. Governor Sam Brownback has proposed three options for filling the $300 million dollar budget gap for this fiscal year and next, none of which are fiscally responsible.Obviously, KCEG strongly opposes further cuts or sweeps to investments in Kansas' future prosperity and we also strongly oppose any additional temporary, one-time budget band aids that damage Kansas' economic prosperity and the well-being of our communities.

While the Governor has said that it isn't useful to discuss the very problem that set Kansas on this path, we disagree. With that in mind, we are gathering at the Statehouse on Wednesday, April 27 to advocate for "Option 4" as the Kansas Legislature reconvenes for the annual Wrap Up Session. Leaders from participating organizations, including myself and our senior fellow, Duane Goossen, will speak in the Visitor Center Auditorium from 9:00 - 9:30 a.m. The auditorium is located near the north entrance of the Capitol Building on the ground level. This is an event for both media and the general public, and we hope you'll be able to join us.

We cannot continue to struggle to get by year after year, knowing that Governor Brownback's failed economic experiment will not bring widely shared prosperity to the state. Kansans shouldn't have to choose between supporting early education programs, Kansas' K-12 system, higher education, roads, or public retirees. We must invest strongly in all of these things if we are going to move Kansas forward. The only proposal lawmakers should be willing to accept is one that will restore our state's financial stability and allow us to once again invest in our future. We cannot afford to sacrifice state investments any longer.

I hope you will join us on Wednesday morning, as we take a stand to fix the problem.

You can RSVP here.

Thank you for your ongoing support of KCEG and restoring responsible budget and tax policy in the Sunflower State.

Annie McKay  

Wrap-up session starts Wednesday with many school issues still up in the air: A blog by KASB

Wrap-up session starts Wednesday with many school issues still up in the air

The Kansas Legislature returns Wednesday for the so-called wrap-up session to find a lot left unwrapped, including many measures that would affect public schools.

Since the end of the first part of the 2016 session last month, state tax receipts cratered again; this time producing a $94 million revenue hole in the current fiscal year and $135 million in the next one, which starts July 1.

In response, Gov. Sam Brownback has provided legislators with several proposed budget cuts, including a $57 million cut to public schools, which his budget director, Shawn Sullivan, has described as the governor’s least favorite option.

Some legislators have called for a reversal of Brownback’s tax exemption for business owners, but Brownback has signaled he is not interested in tackling that subject.

In addition to the funding problem, there are numerous other education issues yet to be decided.

House Bill 2741 would institute sweeping changes to public schools that are opposed by KASB and other education groups. The bill would stop state funding of extracurricular activities and start spending tax dollars to send children to private schools and home schools without any student performance accountability. Legislative leadership has not indicated whether there will be hearings on the bill.

In addition, a House-Senate conference committee is working on a package that includes measures that would provide restrictions on state aid for school district bond projects, restrict some student online data; assess children who are deaf and hard of hearing; require school personnel to receive suicide prevention training and adopt recommendations from the Emergency Safety Intervention Task Force.

Also in conference committee are bills on Working After Retirement and limits on calculation of KPERS benefits.

A more detailed discussion of these and other bills is here.

To get the latest developments from the wrap-up session, please follow KASB’s News Briefs and KASB on Twitter and Facebook. On Twitter, follow @tallman_mark,@tomkrebs1 and @srothschild1.

$57.3 million cut to schools under option presented by Governor: A blog by the Kansas Association of School Boards

ALERT: Public schools would face $57.3 million cut under option presented by Governor: Another projected revenue shortage for state

Public schools would face a $57.3 million cut under an option proposed by Gov. Sam Brownback on Wednesday to balance the budget in the face of worsening state financial news.

KASB issued a statement on the proposal, saying: “We are deeply concerned this is on the table. School districts were told the block grant would be protected. Both our policies and our members say there needs to be another option and that is raising revenue to avoid these cuts.”

Brownback’s Budget Director Shawn Sullivan said the option, including the cut to schools and Medicaid, was the least favorite of the Governor’s but Brownback has put it out there for legislators to consider when they return Wednesday for the wrap up session.

Sullivan unveiled three options.

All the options would reduce state sales tax revenue going to the highway fund by $70 million in the current fiscal year and $115 million in the next fiscal year that starts July 1. And all would reduce funding to higher education.

One option would also cut state agencies in fiscal year 2017 from 3 percent to 5 percent, including public schools, which would sustain a $57.3 million cut. In this option, Medicaid, Kansas University, Kansas State University and Wichita State University would face 5 percent cuts while numerous other agencies would be cut too.

The proposed cut to public schools would exclude payments to KPERS, bond and interest aid, Local Option Budget aid and Capital Outlay aid.

Another option would securitize tobacco payment settlements, a proposal strongly opposed by the advocates of children’s programs funded with tobacco funding. And another option would delay a quarterly payment to the Kansas Public Employee Retirement System until 2018, rather than next year, and reduce expenditures by $25 million through unidentified efficiencies.

Sullivan released Brownback’s options as the state budget situation continued to worsen on Wednesday.

Revenue estimates were decreased for the current fiscal year by $94 million and were decreased for the next fiscal year by another $135 million for a total shortfall of $229 million. The tax receipt numbers were even worse, downgraded $177 million in the current fiscal year and $171 million in the next. Total revenue reductions are not as steep as the tax only decline because of revenue transfers from other parts of the budget.

Budget director Sullivan noted that despite the lower estimates, tax revenue in the current fiscal year is expected to be about $150 million higher than last year. However, the Legislature passed a tax increase last year that was expected to raise $380 million. “You can stop calling it the largest tax increase in history,” he told reporters.

In addition, the estimate of Kansas personal income for the current fiscal year was reduced from 3.9 percent to 3.5 percent from earlier projections.

Budget experts said Kansas has been hurt by lower prices in the agriculture, oil, gas, and aircraft industry.

The state budget has been troubled since state income tax cuts, which Brownback pushed for, took effect.

Since then, Brownback has pushed through two increases in the state sales tax, swept reserves, taken money from the highway department and borrowed to prop up the state pension system.

The state has failed 11 of the past 12 months to hit its revenue estimate and the shortfall was so deep in March, Brownback immediately cut higher education by $17 million. Earlier this month, Brownback delayed a $93 million payment to the state pension fund.

Some Republicans who supported Brownback’s state income tax cuts now say they would like to repeal the cuts that exempted the owners of 330,000 businesses from paying any state income tax. Critics of that tax cut have long argued the cuts didn’t produce the promised economic growth. But Brownback has threatened in the past to veto such a move.

Sullivan on Wednesday reaffirmed the Governor’s opposition to changing that tax cut, but did not specifically threaten a veto.

A new post from the Kansas Association of School Boards on where KS ranks in education funding

Does Kansas rank third in funding K-12 education?

Some legislators note that Kansas ranks third in the share of the state budget that is dedicated to public schools but when considering all funds for education — which legislators say it is important to do — Kansas ranks below the national average. And when it comes to student achievement, the amount of dollars seems more important than the source of the funding.

When all school revenue sources are considered - federal, state and local - Kansas spends $11,596 per pupil, about $800 below the U.S. average and ranking 27th in the nation.

Those numbers are from the U.S. Census Bureau’s report Public Education Finance for 2012-13 school year, the most recent data available. (A new report for 2013-14 should be released later this spring.

This ranking includes not only state appropriations (what we think about as state aid), but also all local revenue sources, including property tax levies, student fees and local gifts and grants; and all federal aid, included education programs and student meal support.

However, looking at the percent of education funding that comes from the state, rather than the amount, Kansas ranks 18th in the country. That is because since the early 1990s, the Kansas Legislature has chosen to rely more heavily on state funding rather than local funding to hold down property taxes and provide a more equalized funding system.

A third way to measure state support for K-12 education is the portion of the state budget that goes to this function. It is this statistic, from the National Association of State Budget Officers, that shows Kansas ranking third.

The percent of a state’s budget spent on K-12 education really does not provide much information on overall funding of education in that state. Among the top fives state on the chart above, Vermont ranks near the top in total funding (6th), Indiana and Kansas rank in the middle (25th and 27th, respectively) and Utah and Colorado rank near the bottom (49th and 38th).

An example of how the share of state budget spent on K-12 or the share of K-12 received from the state can have no impact on overall K-12 funding is illustrated by the way Kansas shifted the 20 mill statewide levy from a local source kept by local districts to a state source collected and then appropriated back to districts by the state. That switch did not change school funding at all, but was a major reason the share of Kansas’ total budget going to K-12 increased from 25.9 percent in 2014 in 29.6 percent in 2015.

Likewise, when the state increased local option budget state aid in 2015 in response to the Gannon decision in 2014, many districts that had reached their maximum LOB amount were required to reduce local property taxes, rather than increase spending.

What about the most important aspect of K-12 education: student achievement? KASB has identified seven states that exceed Kansas on 14 national measures of achievement, including the National Assessment of Educational Progress reading and math tests all student, low income and non-low income students, ACT and SAT tests measuring college readiness, and graduation rates for all students and certain subgroups.

As the following chart shows, neither the percent of state budget spent on K-12 education nor the share of total K-12 funding from the state seems to have a major impact on high achieving states. However, each of the states spends more than Kansas and ranks in the top half of states for TOTAL funding. In other words, the amount of funding seems more important than the source of the funding.

States exceeding Kansas on 14 key achievement measures (and Kansas)	2015 Percent of State Expenditures for K-12 (and U.S. rank)	2013 Percent of total K-12 Expenditures from State Funding (and U.S. Rank)	2013 Total funding per Pupil (and U.S. Rank)
Nebraska	14.7% (40th)	32.1% (49th)	$12,514 (20th)
New Hampshire	20.7% (40th)	35.5% (50th)	$15,320 (12th)
Indiana	20.0% (2nd)	62.6% (9th)	$11,955 (25th)
Massachusetts	11.6% (48th)	40.2% (44th)	$17,315 (7th)
New Jersey	24.9% (12th)	38.7% (47th)	$20,191 (2nd)
Vermont	31.8% (1st)	76.2% (2nd)	$18,130 (6th)
Iowa	16.3% (32nd)	51.7% (24th)	$12,072 (23rd)
Kansas	29.6% (3rd)	56.4% (19th)	$11,596 (27th)

KS Administrative Costs Consistent Over the Past Decade: A Research Report from the Kansas Association of School Boards

Tuesday, April 5, 2016

Kansas Administrative Costs Consistent Over the Past Decade

There have been recent comments in the media regarding the drastic increases in administrative costs in Kansas public schools.  KASB went to KSDE's current operating expenditure summary data to confirm or deny the following statement:  "Administrative costs are increasing dramatically in Kansas schools."

You can find the summary table here, but below are some key points:

• From 2005 to 2015
• Spending on instruction increased almost $875 million; which is a 40.2% increase. 
• Spending on administration increased $78 million; which is a 23.6% increase.
• The percent spent on administration has decreased from 9.2% to 8.2%.  If Kansas was still spending 9.2% of the total expenditures on administration in 2015, we would be diverting an additional $49,636,603 away from the classroom.
• Per pupil spending on instruction increased $1,660; which is a 33.7% increase.
• Per pupil spending on administration increased $134; which is a 17.9% increase.
• The percent spent on instruction has increased from 60.4% to 61.1%. 

Below is a chart showing the total expenditures by year and category.

The bottom blue area represents instruction spending, following by support services for staff and pupils in red and green, then general and school administration in purple and blue.

Note that the lines for general and school administration have remained largely consistent over this time period.  

The graph below shows the expenditures on a per-pupil basis.  

The per-pupil graph looks very similar to the total cost graph; the amounts spent for general and school administration have been very consistent since 2005.  Therefore, based on this information, it seems safe to say that the statement "Administrative costs are increasing dramatically in Kansas schools" is false.

For more information, visit kasb.org/research.  

Linda Hill: Norwich Teacher, Coach, and SADD Sponsor Wins Award

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New KCEG report: Private sector wants state to re-invest in Kansas Schools

FOR IMMEDIATE RELEASE: April 6, 2016    CONTACT: Kendra Bozarth, Kansas Center for Economic Growth 785.783.7370   Kansas public education is foundation for economic growth  New KCEG report: Private sector wants state to re-invest in Kansas schools      TOPEKA - Today the Kansas Center for Economic Growth (KCEG) released a new report to explore the link between public education, a skilled workforce, and a strong economy. The report, "Kansas Public Education: The Foundation for Economic Growth," analyzes the return-on-investment and also the cost avoidance that properly funded public education provides. "The Kansas Legislature recently reached First Adjournment, but the debate over the state's underfunded schools is far from over," said Annie McKay, KCEG Executive Director. "Kansas is not investing enough to ensure public education remains responsive to workforce demands. Unfortunately, lawmakers have offered little other than stall tactics and accounting gimmicks to address the problem. The longer we fail to properly fund schools, the greater harm it will inflict on the Kansas economy." Among the report's main findings: Every dollar invested into Kansas' public schools returns over $2.62 in economic benefits to the state. High school graduates save the state money. The Class of 2014 may save an estimated $111 million on social safety net programs, $985 million on crime control costs, and $1.5 billion on public health costs. 70 percent of community leaders and 81 percent of business leaders expect high school graduates to possess both technical and non-academic skills. Though there are almost 19,000 more students, total state aid is almost $350 million below its peak in 2009 when adjusting for cost increases, and there are over 620 fewer certified teachers in Kansas public schools. "As the leader of one of the most experienced, diversified, and respected mechanical contractors in the United States, I understand the importance of a well-trained workforce. Since our founding in 1893, our vision at U.S. Engineering Company is 'Be the Best.' In order to be the best, we must hire the most skilled employees. The development of that workforce starts with our schools," said Tyler Nottberg, Chairman of the Board for the Business Alliance. "Educating Kansas kids has a broad impact on our state economy," said McKay. "Boosting this investment holds huge potential for the state, but Kansas' unaffordable tax changes are making this otherwise obvious choice incredibly difficult, if not impossible." On Friday, March revenue collections came in yet again below estimates. For 11 of the past 12 months, Kansas has fallen short of revenue expectations. The perpetual budget crisis in Kansas is impeding on the state's ability to adequately invest in one of the most powerful economic development tools - public education. Read the entire report here.  # # #    See all of KCEG's latest research & analysis, including briefs, infographics and other blogs, on our website.

Kansas Center for Economic Growth 720 SW Jackson St, Ste 203 Topeka, Kansas 66603

A Blog on School Board Spending by the Kansas Association of School Boards

School boards putting more funds in classroom as share of administrative costs decreases

School boards across Kansas are putting a larger percentage of funds into the classroom and away from administration, according to a new analysis by KASB.

The analysis shows recent statements in the media alleging dramatic increases in administrative costs are inaccurate.

From 2005 to 2015, the portion of school funding spent on administration has decreased nearly 11 percent, from 9.2 percent of funding to 8.2 percent of funding. In fact, if administrative expenses had stayed at the 2005 percentage of funding, that would have cost the state an additional $50 million.

Administrative spending also fell behind other measurements of spending over the 10-year period.

Overall spending on instruction increased 40 percent, while administrative costs increased 24 percent. Per pupil spending on instruction increased 34 percent, while per pupil spending on administration increased 18 percent. Again, even though total dollars spent on education has increased over the past 10 years, the percentage share that goes to administration has decreased.

The KASB analysis is consistent with an earlier KASB report that shows since 1998, school districts have increased positions that are involved in the direct instruction of students by more than 16 percent while decreasing general administrative positions by nearly 17 percent.

During challenging budget times, school boards are working hard to ensure that tax dollars are spent as much as possible on the direct instruction of students.

A new blog by the Center for Economic Growth

The Kansas Economy: Three Jokes for April Fools' Day

 

By Annie McKay, Kansas Center for Economic Growth Executive Director

I recently reflected on all that's transpired in the last year, taking stock of progress, change, and where work remains to be done. Last year on April 1st KCEG, along with other allied organizations, held a press event at the statehouse where we called on the Governor and policymakers to reverse course and bring to an end the damaging tax plan put in place in 2012. While we weren't joking then, here are some jokes being played on every Kansan this April Fools' Day:

1. Kansas' revenue collections: For 11 of the last 12 months, the state failed to collect the revenue we need to pay the bills. Our expectations have been repeatedly lowered, burying the bar deep in the ground, and yet we have continuously been unable to clear it. Proponents of the failed tax policy offerexcuse after excuse as to why Kansas can't manage to make ends meet, but make no mistake about it - just like the math used to sell this failed policy, the excuses don't add up either. The fact of the matter is Kansas is an outlier when it comes to revenue loss, and like every other measure of success, we trail the region and the nation.
2. Support for education: In the first three months of 2016 alone the Governor and some policymakers proposed  dismantling early education, approved a plan forK12 that shifts money from one pot to another, and cut higher education by $17 million. This comes after consecutive years of sweeps, cuts, and other gimmicks that have left our comprehensive education system struggling. If policymakers and the Governor support education, their actions in the last several years fail to reflect as much. And if we're sincere about growing the Kansas economy, the place to start is with education. 
3. Job growth: Proponents of Kansas' current trajectory continuously change the measure of success for this failed plan. We've pulled apart the Governor's Council of Economic Advisors metrics, personal income growth, and theunemployment rate - none of which add up to signs that the experiment is working. Most notable, however, is Kansas' private job growth, which has been well documented by KCEG and others as being amongst the bottom of the barrel in the region and the nation. If you're keeping track at home, whether measuring since we started down this damaging path or just in the last year, Kansas' private job growth rate is laughable.

April Fools' Day is a time for practical jokes, hoaxes, and other tricks. But since damaging, unaffordable tax changes were enacted in 2012, it feels like Kansas has been living one perpetual April Fools' Day prank - except it's not funny. Kansans have a choice - they can either remain on the receiving end of the joke played on us by proponents of the "March to Zero" or they can call on policymakers to end the hoax that these tax changes will result in growth. It's time to come to terms with the compounding evidence that these extreme changes cost all of us a prosperous future.