Analysis: Step Three of the State Budget – How is Education faring in the Senate’s Budget

With the state capitol under restricted access due to the COVID-19 pandemic, the Kentucky Senate Appropriations & Revenue Committee yesterday passed their version of the state’s spending plan for the next two years. This is step three of the process of crafting the state budget.  Once the full Senate adopts this version, the measure will likely move to a conference committee of House and Senate leaders to resolve any differences. The impact of the COVID-19 pandemic is almost certainly to reframe the final biennial budget. Legislative leaders have stated a request for a new revenue estimate has been made from the Consensus Forecasting Group – the panel of economists charged with estimating revenue for the next two years.

Major elements of the Senate’s committee proposal include:

• Investments to fully fund pensions except that funding for the Teacher Retirement Systems (TRS) is allocated to the “Permanent Pension Fund” only to be distributed to TRS if structural reforms to benefits for new teacher hires are enacted.
• A 1% pay increase each year for public employees including school district classified staff, but not certified staff (teachers). The pay increase for state employees will be suspended in 2022 if actual revenue in 2021 does not meet the December 2019 estimates by the Consensus Forecasting Group.
• A 4% increase in the base SEEK per-pupil guarantee each year, from $4,000 to $4,161, with $6 of these dollars allocated for instructional materials/textbooks. An additional $10 per-pupil in 2021 is directed to be held in trust for districts by KDE only to be distributed if actual revenue in 2021 meets the December 2019 estimates by the Consensus Forecasting Group.
• Additional changes include significant new funding to hire more school mental health professionals, increasing funding to colleges and universities to invest in the performance-based funding formula, and increasing student financial aid – committing all but $2.5 million of lottery proceeds in each year to these programs.

Much of this is positive, and after many years of budget reductions in critical areas of education, stable and even modest increases are a welcome sight.  But this sentiment is obviously tempered by the on-going health crisis related to the COVID-19  pandemic – the impacts of which on the economy are sure to be significant. Concerns remained before recent events about the lack of new revenue to sustain the scale of investments (see our Big bold Ask) necessary to ensure education excellence in Kentucky – from early childhood through postsecondary.  These concerns are now amplified and will certainly be difficult to bear without substantial financial relief from the federal government.

Following is our high-level analysis relative to our Big Bold Ask.  See our earlier posts for analysis of the Governor’s and House’s proposals.

Early Childhood

Achieving high-quality early learning opportunities for all children requires additional investment. This is critical when almost 50 percent of our children enter kindergarten not ready to learn, and 50% of Kentucky families live in a childcare desert and quality childcare is either non-existent or unaffordable for working parents. The Senate’s committee proposal does not make progress on these investments, essentially holding them at current levels with a reduction in preschool partnership grants.

• Public Preschool – The Senate’s committee proposal maintains the eligibility threshold for public preschool at 160% of the federal poverty level. Total funding is reduced by $2.5 million in each year with the reduction of the Preschool Partnership grants from $7.5 million to $5 million. These grants are a positive support for communities to blend services between public preschool and private childcare and we are glad to see them continued, but disappointed to see a decline in overall dollars. We proposed an additional $24 million over the biennium in our Big Bold Ask to begin phasing in investment for eligibility up to 200% of the federal poverty level, higher per-child rates to support quality programs, and continue support for preschool/childcare partnership grants to support families with full-day learning opportunities for kids.
• Child Care Assistance Program (CCAP) – The Senate’s committee proposal also maintains the eligibility threshold for CCAP at 160% of the federal poverty level – providing $10.6 million in each year in General Fund support which is the same as the current level. Similar to preschool, these funds are not sufficient to move the per-child reimbursement rates necessary to support the true cost of quality . Our Big Bold Ask was for $92 million over the biennium to begin phasing in investment for eligibility up to 200% of the federal poverty level, as well as higher reimbursement rates to support quality programs – for infants, toddlers, and preschool age children.

A critical concern is a $2 million cut in tobacco settlement dollars to the HANDS early home visiting program.  HANDS provides critical supports to improve pregnancy and birth outcomes, promote healthy child development, build safe homes, and increase families’ self-sufficiency.  While we understand this reduction may be off-set through the use of other funds, neither the Governor, nor the House’s proposal, nor the Senate’s committee proposal has made that clear.

Click here for a detailed analysis of the early childhood items in the senate proposal.

K-12

To deliver excellence for each and every Kentucky child in our public school, Kentucky must restore investments after long years of cuts and lost buying power.  The Senate’s committee proposal begins this process by providing some strategic investment – an increase in the base SEEK per-pupil guarantee from $4,000 currently to $4,161 in each year, as well as notable increases to hire additional school mental health professionals.  Recognizing these investments as positive progress, Kentucky still needs deeper investment to support teaching and learning at the local level.

• Full-Day Kindergarten – This is not in the Senate’s committee proposal. Our Big Bold Ask was for $42 million over the biennium to begin phasing in investment for full-day kindergarten – freeing local funds for teaching and learning improvements.
• Transportation – The Senate’s committee proposal provides no new funds for school transportation, underfunding the transportation formula as has been the practice for a number of years. Our Big Bold Ask was for $48.6 million over the biennium to begin phasing in investment for transportation – freeing local funds for teaching and learning improvements.
• Teaching Excellence – Kentucky must invest in systematic state support for teacher preparation, professional development, and recruitment and retention – areas that remain underfunded or not at all. Our Big Bold Ask was for $17.5 million over the biennium to invest such supports like teacher mentorship, greater stipends for National Board Certified teachers, and district/university partnerships to innovate teacher preparations and professional learning.

Some additional items to note in the Senate’s committee proposal are worth noting as they could provide support for the teaching and learning environment.

• $1.5 million each year for an Early Literacy Education Pilot program tied to the passage of efforts outlined in Senate Bill 214 and House Bill 488.
• More than a $1 million increase in Read to Achieve line-item to support reading intervention efforts at the school level.
• $1 million in each year for the Academy for Equity in Teaching for teacher recruitment efforts.
• $600,000 in each year for Teacher Loan Forgiveness.

Click here for a detailed analysis of the K-12 items in the senate proposal.

Postsecondary Education

Kentucky’s Council on Postsecondary Education has set an attainment goal of 60% by 2030, while economic projections suggest that the supply of workers with postsecondary education continues to fall short of the demand for an educated workforce. To reach our goals, we must break down barriers to college access, ensure higher education is affordable, and support student success.  The Senate’s committee proposal is a bright spot in the budget – stemming the cycle of funding reductions to our colleges and universities – 33% since 2008 – and increases funds for student financial aid.

• Colleges and Universities – The Senate’s committee proposal includes a 3.5% increase in total funding direct to campuses in 2021 and an additional 1.3% increase in 2022. These increases include $90 million to be allocated through the performance funding model.  This additional investment direct to campuses totals $71 million over the biennium. Our Big Bold Ask was for $93 million over the biennium to begin phasing in investment to fully implement the performance funding model, and the Senate’s proposal is a step in the right direction.
• Need-Based Financial Aid – With lottery receipts projected to rise, this is a bright spot in the budget. The Senate’s committee proposal includes $26.5 million more over the biennium for College Access Program grants for low-income students. Our Big Bold Ask was for $8.9 million over the biennium to begin phasing in investment in CAP grants.  Not only will CAP grants see an increase, but also other critical financial aid programs such as KEES, KTG, Dual Credit, and Work Ready scholarships. Of note, $2.5 million of lottery proceeds are redirected from student financial aid to support the following education-related programs:
  • The Early Literacy Education Pilot Program at the Department of Education.
  • The Read to Achieve Program at the Department of Education.
  • The Jobs for America’s Graduates Program at the Department of Education.
  • The Support Higher Education Project at the University of Kentucky.

Click here for a detailed analysis of the higher education items in the senate proposal.

The Senate’s committee budget proposal represents a step forward for education, but still sobering reminder  that new revenue is necessary  to ensure Kentucky’s investment in education provides the return we know it can.  Without continued progress in education Kentucky’s quality of life and economic growth will suffer.

As noted at the beginning of this post, all of this is substantially tempered by the potential impact of the COVID-19 pandemic on our communities and our capacity to invest in the future.  We can only hope and pray for a quick resolution to the crisis. Stay safe, stay health, embrace your loved ones and act with kindness.

We will have additional detailed analysis when the House and Senate resolve their differences and enact the final budget – with perhaps some additional notes from any support Congress may provide in the next week.

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Further information is available in House Bill 352.