Analysis: State Budget Still Coping with Covid-19 – What Does this Mean for Education?

[vc_row][vc_column][vc_empty_space][wyde_heading title_tag=”h3″ subheading_tag=”h5″ subheading=”This week, the Kentucky General Assembly passed House Bill 192, the revised state budget – a spending plan still impacted by the uncertainties of the COVID-19 pandemic on the state’s financial resources. It is still unclear what the ultimate effect will be of the $1.9 trillion American Rescue Plan recently passed by Congress will be on the Commonwealth.”][vc_empty_space][vc_column_text animation=”fadeInRight” animation_delay=”.2″]Last year, during the 2020 session, legislators enacted a largely a 1-year continuation budget with the early impacts of COVID-19 still unknown at the time. That meant they had to return during this current 2021 session and complete the second year of Kentucky’s biennial budget and make any revisions to the current year. Even with the state’s General Fund showing strong growth due to the effects of  federal stimulus efforts, the budget overall reflects a cautious approach with legislative leaders largely holding spending to current levels.[/vc_column_text][vc_empty_space][vc_column_text animation=”fadeInRight” animation_delay=”.4″]The budget increases funds in the budget reserve trust fund – the state’s savings account – by approximately $600 million. Additionally, the General Assembly is placing restrictions on the expenditure of an estimated $2.4 billion the state is expected to receive from the American Rescue Plan’s State Fiscal Recovery Fund.  This restriction means the Governor cannot expend these funds without authorization from the General Assembly.  This large pot of money can be used for a broad set of purposes including infrastructure necessary for Kentucky’s future success – like broadband.[/vc_column_text][vc_empty_space][vc_column_text animation=”fadeInRight” animation_delay=”.6″]There are some indications that the Governor and legislature are still talking about the uses of these State Fiscal Recovery funds and might resolve any differences before the end of this session – or perhaps during a special session.  In any case, the General Assembly will be back in nine short months to revisit the budget in 2022’s regular budget session.  At that time, the hope is much more will be known about the impact of COVID-19 on available state revenue.[/vc_column_text][vc_empty_space][vc_column_text animation=”fadeInRight”]Additionally, Kentucky has received and is estimated to receive considerable support for education from various federal stimulus packages that Congress has enacted since the beginning of the pandemic in March o2020.  These are not subject to the restrictions placed on state recovery funds by the General Assembly. In total, these are record amounts for federal funding to education. These investments – at their best – provide an opportunity not just to return to pre-pandemic status quo, but rather to envision a better system of supports for students, families and educators into the future.[/vc_column_text][vc_empty_space][vc_column_text animation=”fadeInRight”]

Select Education-Related Funding from Major COVID-19 Federal Stimulus Packages – KENTUCKY

[/vc_column_text][vc_raw_html]JTVCd3B0YiUyMGlkJTNEMTQyNjYlNUQ=[/vc_raw_html][vc_empty_space][vc_column_text animation=”fadeInRight”]Education Highlights

Below are highlights of education funding -early childhood through postsecondary – included in House Bill 192 with links to full tables.[/vc_column_text][vc_empty_space][vc_column_text animation=”fadeInRight”]For early childhood education, House Bill 192 provides no increase for either public preschool or child care assistance – continuing funding at their current levels for these critical programs, as well as the HANDS home visiting program.[/vc_column_text][vc_empty_space][vc_column_text animation=”fadeInRight”]

CHILD CARE ASSISTANCE PROGRAM • GENERAL FUND
HEALTH AND FAMILY SERVICES CABINET

[/vc_column_text][vc_raw_html]JTVCd3B0YiUyMGlkJTNEMTQyNjklNUQ=[/vc_raw_html][wyde_heading title_tag=”h3″ subheading_tag=”h5″ subheading=”Child Care Assistance Program Note HB 192 FCCR keeps the current eligibility level of 160% of the federal poverty level. CCAP is largely funded by federal dollars not shown here, in addition to state General Fund and Tobacco Settlement dollars.”][vc_empty_space][vc_column_text animation=”fadeInRight”]

PRESCHOOL PROGRAM • GENERAL FUND
EDUCATION DEPARTMENT

[/vc_column_text][vc_raw_html]JTVCd3B0YiUyMGlkJTNEMTQyNzElNUQ=[/vc_raw_html][wyde_heading title_tag=”h3″ subheading_tag=”h5″ subheading=”Preschool Note HB 192 FCCR Keeps The Current Eligibility Level Of 160% Of Poverty.”][vc_empty_space][vc_column_text animation=”fadeInRight”]

EARLY CHILDHOOD DEVELOPMENT • GENERAL FUND (TOBACCO)
MULTIPLE DEPARTMENTS

[/vc_column_text][vc_raw_html]JTVCd3B0YiUyMGlkJTNEMTQyNzUlNUQ=[/vc_raw_html][vc_empty_space][vc_column_text animation=”fadeInRight”]For K-12 education, House Bill 192 largely maintains current levels of funding with a few notable changes:

• Maintains the SEEK per-pupil base guarantee at $4,000 and replaces $130 million in FY 2021 SEEK funding with federal funds. Total SEEK appropriation is reduced $37 million in FY 2022 with local districts paying for larger share of guarantee.
• A $2 million increase for the Kentucky School for the Blind and School for the Deaf.
• $2.6 million in FY 2022 for Advanced Placement Exam fees.
• $800,000 in FY 2022 for Dolly Parton’s Imagination Library that provides books to children from birth to age 5.

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GENERAL FUND APPROPRIATION | SHOWN IN MILLIONS OF DOLLARS

[/vc_column_text][vc_raw_html]JTVCd3B0YiUyMGlkJTNEMTQyODQlNUQ=[/vc_raw_html][vc_raw_html]JTVCd3B0YiUyMGlkJTNEMTQyODYlNUQ=[/vc_raw_html][wyde_heading title_tag=”h3″ subheading_tag=”h5″ subheading=”SEEK Per Pupil Funding Note For FY 2022, HB 192 FCCR Keeps The $4,000 Per Pupil Guarantee SEEK Base Funding Note For FY 2021, HB 192 FCCR Call For $130 Million In Federal Funding To Be Spent On Funding The SEEK Base. Preschool Note HB 192 FCCR Keeps The Current Eligibility Level Of 160% Of Poverty. Career And Technical Education Note For FY 2021 And FY 2022, HB 192 FCCR Call $12,043,500 Of The Total Line Item Amount To Be Distributed To Local Area Vocational Education Centers.”][vc_empty_space][vc_column_text animation=”fadeInRight”]

DETAIL FOR DEPARTMENT LINE ITEMS SMALLER THAN $5 MILLION

[/vc_column_text][vc_raw_html]JTVCd3B0YiUyMGlkJTNEMTQyODglNUQ=[/vc_raw_html][vc_column_text animation=”fadeInRight”]For postsecondary education there is good news. House Bill 192 includes increases for both state financial aid programs to support students, as well as increases directly to institutions.

• A $9 million increase in College Access Program (CAP) grants in FY 2021 and $8 million in FY 2022. CAP is the state’s largest need-based financial aid program serving low-income students.
• $1 million for Teacher Scholarships in FY 2022. This program had been unfunded in prior budget and its important to see supports for teachers reflected going forward.
• Postsecondary institutions received a $19 million reduction in General Fund in the current year which was replaced by support from federal CARES Act funding by the Governor.
• Postsecondary institutions received a $41.5 million increase in FY 2022, equivalent to a 4.8% increase. Over half of this increase is to support participating colleges and universities’ fixed allocation contribution to public pension system, with additional funds also allocated through the performance-based funding formula.

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POSTSECONDARY GENERAL FUND APPROPRIATION | SHOWN IN MILLIONS OF DOLLARS

[/vc_column_text][vc_raw_html]JTVCd3B0YiUyMGlkJTNEMTQyOTElNUQ=[/vc_raw_html][wyde_heading title_tag=”h3″ subheading_tag=”h5″ subheading=”Council On Postsecondary Education Funding Note The Current Year Reduction In FY 2021 At Postsecondary Institutions Was Offset With An Increase From Federal Coronavirus Relief Funds. Approximately $22.1 Million Of The Increase In Funding In FY 2022 To Postsecondary Institutions Is Mandated To Support Participating Colleges And Universities’ Fixed Allocation Contribution To Public Pension System.”][vc_empty_space][vc_column_text animation=”fadeInRight”]

GENERAL FUND DETAIL ON FINANCIAL AID | SHOWN IN MILLIONS OF DOLLARS

[/vc_column_text][vc_raw_html]JTVCd3B0YiUyMGlkJTNEMTQyOTIlNUQ=[/vc_raw_html][wyde_heading title_tag=”h3″ subheading_tag=”h5″ subheading=”Kentucky Educational Excellence Scholarship (KEES) Note KEES Is Kentucky’s Largest Merit-Based Scholarship Program. The Funding Shown Above Reflects The General Fund Portion Only From Lottery Receipts. Total Funding Is Approximately $124 Million And $126 Million In FY 2021 And 2022 Respectively When Including Restricted Funds Appropriation Of $10 Million From Unclaimed Lottery Prizes. College Access Program (CAP) Note CAP Scholarships Are Kentucky’s Largest Needs-Based Financial Aid Program. Lottery Receipts Fund The Majority Of Kentucky’s State Financial Aid Programs And Remain A Consistently Strong Source Of Revenue.  This Is Reflected In The Increase Noted In The Table For CAP. Lottery Revenue Note The Consensus Forecasting Group’s Official Estimates Are $286.1 Million In FY 2021 And $292 Million In FY 2022. By Statute, $3 Million Is Deducted “Off The Top” For The Collaborative Center For Literacy Development And The Reading Diagnostic & Intervention Fund.  The Majority Of The Rest Flows To State Financial Aid Programs By Formula Or Direct Appropriation. In The Free Conference Committee Report, All But $750,000 Of Net Lottery Proceeds Are Committed To Student Financial Aid In FY 2021 And All But $3.6 Million In FY 2022. The FCCR Calls For Net Lottery Proceeds Equaling $283.1 Million In 2021 And $289 Million In FY 2022 To Be Appropriated To Student Financial As Indicated Above (Except For The Veterinary And Optometry Contract Spaces Which Are Not Funded With “Lottery Proceeds” But Regular General Fund Dollars). The Other $750,000 In FY 2021 Is Being Distributed To Support Education: The Jobs For America’s Graduates (JAG) Program At The Kentucky Department Of Education And The Support Higher Education Project At The University Of Kentucky. In FY 2022, $1 Million Is To Support JAG And $2.6 Million To Support The Cost Of Advanced Placement (AP) Exams For Students In High School.”][vc_empty_space][vc_column_text animation=”fadeInRight”]

ADULT EDUCATION GENERAL FUND APPROPRIATION | SHOWN IN MILLIONS OF DOLLARS

[/vc_column_text][vc_raw_html]JTVCd3B0YiUyMGlkJTNEMTQyOTQlNUQ=[/vc_raw_html][vc_empty_space][vc_column_text]Our summaries for Early Childhood, P-12 Education, and Postsecondary Education, include changes to the budget for both the current year FY 2021 and FY 2022.

The increases in CAP needs-based financial aid and to postsecondary institutions are a step forward on two of the seven items in the Prichard Committee’s Big Bold Ask. The budget did not strengthen Kentucky’s investment in the other priorities in that Ask: child care assistance, public preschool, fully-funded kindergarten, fully-funded school transportation, and teaching excellence.

Other Legislation with Possible Budget Impacts

We are tracking additional legislation still making its way through the General Assembly that may have budgetary impacts if passed.

• House Bill 320 would impact how broadband projects can be delivered in Kentucky and includes a $250 million appropriation to support broadband expansion. It overwhelmingly passed the House and currently awaits action in the Senate.
• House Bill 563 narrowly passed the House 51-45 and it awaits action in the Senate. The legislation addresses enrollment policies of public-school districts for non-resident students and includes controversial provisions for scholarship tax credits – now termed education opportunity accounts.  The House amended provisions in Kentucky law to count kindergarten attendance as a full-day for calculating funding in the state’s funding formula for public schools, SEEK.  This effectively would fund all-day kindergarten through the SEEK formula and would require an appropriation.

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