A No Confidence Budget By Kansas Center for Economic Growth Senior Fellow Duane Goossen

A No Confidence Budget

By Kansas Center for Economic Growth Senior Fellow Duane Goossen

Kansas lawmakers just passed a revised budget that covers the remainder of this fiscal year, but they showed little confidence that their budget would actually work. To hedge, they added provisions allowing the governor to "delay" the final retirement system (KPERS) payment, or simply cut appropriations at the last minute in order for Kansas to escape financially from FY 2016.

The KPERS provision allows the governor to make only three quarterly payments into the retirement system this fiscal year, if money runs out. The fourth payment must still be made, but not until next year, and then with eight percent interest tacked on. That means three payments in FY 2016, but five in FY 2017. In other words, the KPERS payment gets put on the credit card. The state slides by now, but pays big time next year.

Alternatively, or in addition, the governor can unilaterally make cuts to almost any part of the budget before the end of the fiscal year. Not enough money to pay expenses? Just don't pay.

These provisions have a "trigger mechanism" that has already triggered. The governor receives the authority to delay the KPERS payment or cut spending when the general fund balance falls below $100 million, a mark hit long ago.

Lawmakers gave the governor this authority knowing the unlikelihood of the state having enough money to meet budgeted expenses. These extraordinary provisions allow lawmakers to dump the situation back on the governor and leave town without addressing the real problem-a large structural budget imbalance caused by unaffordable income tax cuts.

Consider expenses. The revised budget sets general fund expenses at $6.298 billion. That budget already imposes many spending cuts, leaves school funding with inequities, accepts operational problems up and down state government, and shifts $106 million of school transportation costs to the highway fund for payment.

But Kansas will not receive enough revenue to meet that conservative set of expenses. Even though sales tax rates were raised to record levels, the official revenue estimate only forecasts $5.972 billion in recurring revenue, but Kansas is not currently on pace to garner that. To get the rest of the way, lawmakers have agreed to transfer more than $300 million from other funds. And when that's not enough, the governor can delay the last KPERS payment, or cut programs some more. 

Uncertainty prevails. Agencies and schools do not have assurance that they can count on their appropriations. Kansas lives day-to-day on the financial margin.

The fallout from the income tax cuts is exacting a high toll on Kansas finances, a crippling problem that will continue until lawmakers face the mistake that has been made.

A look at equitable tax levies for school districts in Kansas

Tuesday, February 16, 2016 by Dr. John Heim - Executive Director of the Kansas Association of School Boards

McFly Looks at Equity

I love me some history. Having taught the subject to teenagers, I know that my enthusiasm isn’t shared by all. We have all heard some variation of the axiom “Those who forget the past are doomed to repeat it.” Goodreads website attributes various permutations of this wisdom to folks ranging from George Santayana to Lemony Snicket to Jesse “The Body” Ventura. The ever-cynical Kurt Vonnegut offered an admonishment saying, “I’ve got news for Mr. Santayana: We’re doomed to repeat the past no matter what.”

Let’s see if we can’t change Kurt’s mind. First, I will attempt to make history interesting by making this lesson about something near and dear to everyone: your money. Next I will outline the dangers of falling into the trap of time as a flat circle.

It is time to get started, so crank up the DeLorean and fire up the flux capacitor: We are headed for 1988. Ronald Reagan is president and a Bush is running for president. (Check that dial again: 1988? This seems like déjà vu.) Denver lost the Superbowl. OK, that’s good. Bono and U2 are at the top of the charts and “Rain Man” is playing at the Cineplex. An Islamic woman prime minister is serving in Pakistan.

Locally, Danny and the Miracles will win the National Championship. That’s the good news. The bad news is that if you live in the Spring Hill School District your General Fund school mill levy is 119.3 mills. But the good news is that if you live in the Burlington School District your local mill levy is 6.9 mills. That’s right, the range of mills necessary to support local schools ranged from 6.9 to 119 mills. The median mill levy was 53 mills.

In 1988, the highest five mill levies in Kansas were:

District	1988 GF Mills	2016 GF Mills
Spring Hill	119.3	20
Blue Valley	93.4	20
Olathe	92.9	20
Desoto	91.2	20
Topeka	87.5	20

When equity was finally addressed in the 1992 law, all General Fund mill levies were set at 35 mills. The law also included assistance for low valuation districts in their bond and interest funds. For all but about 20 districts, the shift to 35 mills represented a huge decrease in local property taxes. The property tax decrease – and resulting revenue dip - was compensated for by increases in sales and income taxes.

Over the next few years, as the state’s economy improved, the General Fund mill levy was decreased a few more times until it reached the current 20 mill levy indicated above. The question of why the legislature passed the 1992 school finance bill is subject to some debate, but it cannot be denied that tax equity was a big part of the equation.

But why is tax equity such an important factor in a school finance case? The courts have held that a child’s education cannot be a function of his or her address. Because the taxpayers in the highest taxed districts were paying 17 times what those in the lowest were paying, issues of equity come into play. It is harder to raise the revenue in a high tax district than it is in a low tax district.

Without proper equity provisions in a school finance system, Kansas runs the risk of falling back into the trap of some districts paying significantly more locally than others. We don’t want to go back to Biff’s future where up is down and down is up.

How can we avoid this? That’s the topic for next week’s blog.

Save the Kansas Children's Initiatives Fund

Kansas Center for Economic Growth Blog on KS Slow Job Growth

Kansas' Slow Job Growth - Excuses, Excuses

By Kansas Center for Economic Growth

When proponents of the unaffordable tax cuts start talking about why Kansas' job growth hasn't taken off, it seems there is a different reason every time. The latest explanation offered for Kansas' anemic job growth: Kansas' low unemployment rate. Apparently, if fewer people are looking for jobs, then job growth will slow down. But, like the other reasons given for the tax plans failure to stimulate the economy, it doesn't add up.

An analysis of other states with lower unemployment rates than Kansas shows that this is false. In fact, of the eleven states with a lower or similar unemployment rate, most beat Kansas in job growth, whether you count total jobs or only private sector jobs.

 

What's more, all but two of these states started with lower unemployment rates than Kansas over the same 36-month span - meaning they had even less slack in their labor market.

Kansas' current low unemployment rate is not unprecedented either - it could be possible that low unemployment does equate to less robust job growth in the state. So, let's go back to the 36-month span between January 1997 and December 1999, where the unemployment rate was similar to the present - even slightly lower. This means we should expect even lower job growth than the present period.

What we see is the complete opposite of the story currently being told about Kansas' slow job growth: the growth in total and private sector jobs during the late 1990s is double that of what we're seeing today.

 

 

Also, we've previously noted that Kansas' unemployment rate isn't really much to brag about as we've been lower than the nation and on par with our neighbors for the past 25 years.

Instead of generating new reasons to try and explain away the tax cuts' failure to boost job growth, Kansans need to see solutions that address the stagnant economy. When Kansas last enjoyed a low unemployment rate and high private job growth, the state was making investments in the things that are proven to create a solid base for job growth - schools, safe and healthy communities, roads - and that keep and attract people and businesses to the Sunflower State.

State of Kansas Efficiency Review

The Efficiency Review: Small Ripples in a Big Pond of Troubles

By Kansas Center for Economic Growth Senior Fellow Duane Goossen

Kansas lawmakers paid $2.6 million for a 257-page, recently-released efficiency review of state government. What should we make of it?

• The most important section of the report - budget process review - tells lawmakers to structurally balance the budget (recurring revenue equals expenses), and establish a rainy day fund, two critical financial practices that have been completely upended in Kansas by the 2012/2013 tax cuts.

• Even if lawmakers implement every single "efficiency reduction," Kansas will still not achieve structural budget balance or have a rainy day fund. $2 billion in potential savings may sound big, but that amount represents a cumulative 5-year total, a substantial share of which does not accrue to the general fund. Plus, the savings estimates for some of the components are just guesses, and likely too high. Further, items like the sale of surplus property, or depleting cash balances in school districts, produce only one-time dollars. And lawmakers will never, even in the wildest of dreams, ever implement all the recommendations.

• A large swath of the recommendations do not represent efficiency savings at all, just plain cuts. For example, $543 million in "savings" over 5 years, more than a fourth of the grand total, would be garnered by reducing health benefits to state employees and teachers. State employees would all be moved to a high deductible health plan. In this scheme, the state pays less and employees pay more; not a good move when the state struggles to fill positions at state hospitals and prisons.

• Several items actually propose an increase in spending in order to secure more revenue. Spend more to get more. Supposedly, about $50 million a year could eventually be garnered by hiring 54 new tax auditors and collection agents. If that is true, staff reductions of the last few years have seriously hurt the efficiency of the Department of Revenue, just as they have also damaged the operations of state hospitals and prisons.

• The review turned up some things that are worth doing - such as better coordination of insurance purchases, and energy savings ideas. Certainly state government should always work to provide the most efficient services possible with taxpayer dollars. However, items that might be classified as easy or "low-hanging fruit" were already accomplished long ago as the state struggled through the Great Recession and then grappled with reduced revenue as a result of tax cuts.

So, charge ahead, lawmakers. Implement every item that truly makes Kansas government more efficient. But remember that the key issue you face is not inefficiency. The 2012-2013 tax changes so damaged the state revenue stream that Kansas does not have enough income to meet even a conservative or "efficient" set of expenses. That's the real problem that must be fixed so that Kansas can once again invest in the future.

Opposing opinions about teacher merit pay aired during informational hearing

Opposing opinions about teacher merit pay aired during informational hearing - A report from the KS Association of School Boards

Opposing opinions about the value of a teacher merit pay system was aired Tuesday during an informational hearing before the House Education Committee.

In his State of the State speech last week, Gov. Sam Brownback said merit pay should be part of any new school finance plan.

Before the Education Committee, Brownback’s policy director, Brandon Wilson, said the governor supported merit pay in general but didn’t have a specific proposal and thought of local school districts should be in charge of formulating plans specific to their districts.

KASB's Mark Tallman, associate executive director for advocacy, reiterated KASB's position in opposition to a state-mandated plan.

Tallman said school boards can already provide performance-based pay but should not be required to do so by the state.

He also said, “KASB is not aware of any research-based consensus that pay for performance improves overall results.” Here is a link to KASB’s testimony.

KNEA’s Mark Desetti and other school advocates said merit pay for teachers would hurt schools and students because teachers, who routinely collaborate to help students, would stop doing that in the competition for bonuses.

But proponents of merit pay said it would help retain quality teachers.

David Dorsey, a former teacher and now a senior education policy analyst with the Kansas Policy Institute, said, “The current system is a one-size-fits-all approach that fails to recognize differences among teachers and teaching assignments. Teachers don’t make widgets, they don’t work on an assembly line. It makes no sense that they get paid as if they do.”

Dorsey added that legislators should have faith in local school boards and their appointed administrators “to recognize teacher quality and assume the responsibility to reward it.”

Two teachers — Bruce Wellman and Monte Slaven — said Kansas should step up efforts to have teachers qualify under the National Board Certification program.

They said the highly-regarded system analyzes a teacher’s performance and abilities in numerous ways and provides a fair, rigorous and objective measure of teaching skills.

The state rewarded teachers who achieved NBC designation but then stopped funding it for several years. Program funding began again last year.

January is National Stalking Awareness Month: An Article from Dept. of Homeland Security Stop. Think. Connect.

JANUARY IS NATIONAL STALKING AWARENESS MONTH

One in five Americans are affected by cyberstalking, persistent emails, and other unwanted contact according to a study by the National Cyber Security Alliance. This January is National Stalking Awareness Month – a month dedicated to educating the public about the dangers related to the crime of stalking both online and offline. The month also provides a good opportunity to identify the ways Americans can protect themselves online.

The Stalking Resource Center SRC) of the National Center for Victims of Crime, is a Stop.Think.Connect. National Network partner. The SRC defines “stalking” generally as harassing or threatening behavior that an individual engages in repeatedly, such as following a person, appearing at a person's home or place of business, or making harassing phone calls. Cyberstalking follows the same definition; only perpetrators utilize technology to torment their victims. This can involve continuously contacting someone online or e-mailing threatening or hateful messages.

The best defense against cyber stalking is to avoid oversharing information – especially online. Here are some basic tips from the Stop.Think.Connect.™ Campaign, the Department of Homeland Security’s national cyber security awareness program, to keep in mind when sharing online.

1. Don’t broadcast your location. Do not activate location or geo-tagging features on your devices. You could be telling a stalker exactly where to find you.
2. Connect only with people you trust. While some social networks might seem safer for connecting because of the limited personal information shared through them, keep your connections to people you know and trust.
3. Keep certain things private from everyone. Certain information should be kept completely off your social networks. While it’s fun to have everyone wish you a happy birthday, or for long-lost friends to reconnect with you online, listing your date of birth with your full name and address provides potential stalkers with crucial information that could give them further access to you.
4. Be thoughtful about what you share. Be aware that when you share a post, picture or video online, you may also be revealing sensitive information about yourself and others. You don’t own anything you post online, and people could use your information, photos, or content for malicious purposes.

To find out how you can support National Stalking Awareness Month or find out more information on stalking, please visit the National Stalking Resource Center and the National Stalking Awareness Month website.