Kansas legislators are home for their annual break between regular and veto sessions. This year, the state’s desperate fiscal situation weighs heavily on their thoughts.
When they return May 1, emphasis will be to construct a school finance formula that increases aid to schools, as well as address a looming $1.1 billion shortfall for fiscal years 2018 and 2019.
“That’s the heavy lifting we’re looking at,” said Rep. Kent Thompson, who represents much of Allen and Neosho counties in the House.
Make no mistake, “heavy lifting” is not hyperbole.
First on the agenda will be school finance.
Kansas Supreme Court justices earlier issued two rulings, the first saying block-grant funding, which eliminated weighting and other factors meant to make funding equitable, was unconstitutional, and ordered legislators to develop a new formula. To date, machinations are trending toward what was in place for more than 20 years before block-grant funding was instituted.
Thompson occasionally has described the abandoned formula as “being fine, just not adequately funded.”
The financial burden for schools has fallen to the state since that formula was constructed in the 1990s; first with a 35-mill statewide property tax levy, then 37 and finally 20, when dot-com spin-off fattened tax revenue.
The trick is to make the math arrive at an equitable plan with adequate revenue to provide a good education.
Discussions have centered on increasing school aid by $150 million for each of the next five years, a total of $750 million.
Whether that will meet Supreme Court muster won’t be known until it’s done. By court order, all must be wrapped up by June 30.
“I would assume that what’s being done, or something very similar to it, would pass the House,” Thompson said. He didn’t fully commit support, preferring to wait until the final version. “There are a lot of touchy items,” and any number could encourage or discourage individual House members’ support.
The tipping point is that a new school formula, in present form with per-pupil base aid going from $3,852 to $4,006 in the first year, will have sharp effect on the ballyhooed shortfall of the next two years, propelling it to $1.4 billion. At the end of five years per-pupil base aid would be $4,806 in 2021-22.
THE NEXT shoe to fall is where Kansas will find revenue.
This fiscal year’s gap, $290-odd million as recently as a couple of weeks ago, was filled with what Thompson called “creative financing,” which means borrowing and delaying funding to state agencies and sweeping reserve funds.
That shortfall in relation to overall state funding wasn’t ominous, more a burr under the saddle, but the $1.1 billion — or $1.4 billion if the school finance is passed — legislators have to tackle for the two-year budget that will take effect on July 1 is very much another matter.
Earlier in the session, both chambers passed with substantial margins a bill to restore tax cuts made in 2012-13, including a package that protected from tax assessment pass-through income for 300,000 businesses and farmers.
Gov. Sam Brownback, as promised, vetoed the measure. House members overrode the veto; the Senate didn’t. Thompson and Adam Lusker, who also represents Allen County, voted for passage and override in the House; Caryn Tyson, the county’s senator, was opposed to both passage and override.
The income tax restoration issue far from dead, said Thompson. “We have to have revenue, and there are only three places to get it — sales, property or income taxes.”
He assured no one in the Legislature had any stomach to increase the sales tax, which already has Kansas in one of the highest tiers in the nation. The same is true for property taxes, “which would get an equal pushback.”
That leaves the income tax.
In some manner, the Legislature appears to have no option but to seize that leg of the three-legged revenue stool. To do otherwise, and try to wiggle through the next two years with spending cuts and aforementioned “creative accounting” would be catastrophic for the state’s 2.9 million residents.
Regardless how much conservatives want to rail about waste and that schools, in particular, have more money than they need, actuarial reality runs far to the other side of the fiscal fence.
Anyone who looks closely at school finance knows block-grant funding generated more cash. However, the contention that schools are now better off is fantasy, with the primary reason being that funds for the public employees retirement system and that for special education were included in the grants and “passed through” school budgets, making them appear more robust than they are. In reality, those additional funds never made it to the classroom.
TO GIVE perspective:
The three unified districts in Allen County — 256 (Moran and Elsmore), 257 (Iola, Gas and LaHarpe) and 258 (Humboldt) — would have upticks in general funding with the new school formula as proposed.
For 256 additional aid would be $44,368; 257 $161,813; 258 $73,113.
Statewide the increase would be $132.6 million, the remainder of the $150 million in the first year inserted elsewhere in district budgets. Whether that would be sufficient to meet the court’s demand for increased funding for adequacy would not be known until after the formula’s approval.
Thompson is of the opinion his colleagues are well-attuned to the seriousness of what they face and won’t waste time with political posturing when they return to Topeka.
