Wednesday, January 18, 2017

KASB Blog: Time to Fund Schools

Time to fund schools to keep up with inflation, changing costs, needed programs

KASB urges the Legislature and Gov. Brownback to fund schools at the level needed to keep up with changing costs and invest in the programs known to drive student success.
Between 2009 and what Brownback recommends for 2019, total aid increases from $3.76 billion to $3.96 billion, or approximately $200 million over 10 years, which is an increase of just over 0.5 percent. That fails to keep up with inflation, growth in enrollment and the changing needs of our students.
In fact, school operating budgets would actually decline from $3.45 billion to $3.38 billion. State aid for school district operating budgets pays for teachers and instructional staff, student support programs, leadership, operations and maintenance.
KASB research has shown that states with the highest levels of student success:
— Spend more per pupil than Kansas;
— The spending gap between Kansas and high-level states has widened since the implementation of the block grant;
— Kansas ranks 38th among states in the rate of increases in school funding since 2008;
— Kansas student achievement, although still high, has not increased as much as the national average and peer states in recent years.
“KASB understands the difficult budget and tax choices the Legislature faces. But we believe the time has come to stop allowing education funding to fall behind inflation, enrollment and other states,” said Mark Tallman, KASB’s associate director for advocacy.
“We need to begin investing in programs we know help students succeed. These include additional support for low income, disabled and ELL students to narrow the achievement gaps in high school graduation; improving preparation for postsecondary education; and expanding college and technical education programs,” Tallman said.
“It also requires supporting the State Board of Education’s Kansans Can vision to make Kansas the world leader in the success of each and every student. We urge the Legislature to address the state’s revenue shortfall so that school funding matches the rate of inflation and student growth, plus funding for the additional programs identified above. We understand that it will take additional, on-going revenue, and we support a balanced, comprehensive program to raise that revenue,” Tallman said.

Thursday, January 5, 2017

The Gap Lawmakers Must Close

The Gap Lawmakers Must Close
By Kansas Center for Economic Growth Senior Fellow Duane Goossen

The Kansas budget has a huge structural imbalance, a daunting gap between income and expenses. For the Kansas general fund to remain solvent, lawmakers must close the gap.
The general fund became structurally unbalanced immediately after the 2012 income tax cuts were implemented, but the situation has become especially dire now with reserves used up and the highway fund tapped out.  
Look closely at revenue. The latest Consensus Revenue Estimate (CRE) forecasts total general fund revenue in FY 2017 at just under $6.0 billion, but that total already includes previously authorized one-time transfers of about $400 million from many different funds (especially the highway fund). That means real income, actual money coming in during FY 2017 to pay bills, is just under $5.6 billion. And the CRE forecast for FY 2018: just under $5.6 billion. And for FY 2019: just under $5.6 billion. Before the tax cuts, the general fund took in more than $6.3 billion annually, but by FY 2017 income has dropped under $5.6 billion without any prospect for improvement.
Now consider expenses. Even a constrained set of expenses for FY 2017 totals over $6.3 billion. Block-granted school funding and emergency budget cuts to Medicaid providers and higher education have already been baked into that number. And those expenses will certainly grow in FY 2018 and beyond. Medicaid costs always rise. Required contributions to the retirement system (KPERS) increase each year. Enormous pressures across state government - no raises for state employees in nine years, understaffed hospitals and prisons, underfunded schools - will push costs up. 
The Legislative Research Department's general fund profile outlines the grim structural problem. If the gap is closed only by cutting expenses, another $349 million must be chopped during the six months that remain of FY 2017, then an additional $582 million cut from services in FY 2018. Closing the gap by forcing expenses below $5.6 billion may be theoretically possible "on paper," but highly dangerous and irresponsible, if actually done.
Alternatively, the governor and some lawmakers may promote some type of one-time solution - selling assets, borrowing, paying bills late - to address the remaining $349 million shortfall in FY 2017. (Remember, lawmakers have already approved about $400 million in one-time transfers for FY 2017.) But doing that does nothing to fix the structural problem. It only delays the inevitable reckoning and makes Kansas poorer in the process.
Kansas simply needs more ongoing revenue. The recent Rise Up coalition proposalprovides a plan that restores financial solvency and tax fairness, without resorting to damaging program cuts or one-time solutions. The situation that Kansas faces requires a broad plan, more than just closing the LLC loophole. It's either restore revenue to meet expenses, or whack away at education, highways, human service programs, and public safety. 
The task ahead is critically important, though not politically easy. Many key services, which have already been cut or constrained, now hang in the balance. Hopefully when the next legislative session ends, Kansas will be moving toward financial stability, no longer consigned to downward descent.