Sunday, June 2, 2013

Legislature Approves Budget and Revenue Bills; Rejects Common Core Challenge

The Kansas Legislature ended a three-and-a-half week wrap-up session early Sunday morning after adopting a budget that keeps K-12 funding essentially level over the next two years, and a tax bill that avoids a projected deficit within two years. A proposal aimed at slowing the state’s involvement in multi-state educational standards passed the Senate but was defeated in the House.

Although the tax policies adopted in HB 2059 increase state revenues over the next few years compared to
current law, the bill also includes further income tax cuts that increase through 2018 and are likely to keep K-12 funding increases below the rate of inflation over the next five years.  It also provides that, beginning in FY 2019, when annual revenue growth from certain tax sources exceeds two percent, further income tax rate cuts would be automatically enacted.  As a result, future funding available for school finance would continue to be constrained.

Common Core and State Standards

On Saturday, the House defeated HB 2391, which had been approved earlier in the day by the Senate to create a two-year joint legislative oversight committee for educational standards.  It would also have blocked implementation of any new multi-state educational standards adopted by the State Board of Education between January of 2013 and April of 2014.  In March, the House Education Committee had rejected a bill blocking implementation of the Common Core reading and math standards adopted by the State Board in 2010.  However, Senate negotiators earlier this month offered a budget “proviso” that would have prohibited the use of state appropriated funds for implementation of the Common Core standards and the Next Generation Science Standards currently under consideration by the State Board of Education, and assessments affiliated with those standards.

KASB opposed both the bill and proviso, urging legislators not to block standards that districts are already implementing; an action that could threaten the state’s No Child Left Behind waiver.  The new language in HB 2391, which was adopted by the Senate Ways and Means Committee on Friday, addressed that concern by exempting standards already adopted prior to the 2013 Legislative session, which include the Common Core reading and math standards.  Supporters of the bill called it a “pause” to provide further legislative study of the issue, and the Senate passed the bill Saturday on a vote of 24-12.  Here is the roll call vote:

Yeas: Abrams, Apple, Arpke, Bowers, Bruce, Denning, Fitzgerald, King, Knox, LaTurner, Love, Lynn, Masterson, Melcher, O'Donnell, Olson, Ostmeyer, Petersen, Pilcher-Cook, Powell, Pyle, Smith, Tyson, Wagle.
Nays: Faust-Goudeau, Francisco, Haley, Hawk, Hensley, Holland, Kelly, Longbine, McGinn, Pettey, V. Schmidt, Wolf.
Present and Passing: Kerschen.
Absent or Not Voting: Donovan, Emler, Holmes

Opponents of the bill argued that criticisms of the Common Core standards are unfounded; that the bill usurped the State Board of Education’s authority to set educational standards; and that additional oversight is unnecessary because the State Board is an elected body just like the Legislature.  Those arguments prevailed in the House, where a motion to concur in Senate amendments failed, 55 to 58.  Here is the House roll call vote:

Yeas: Bradford, Brunk, Couture-Lovelady, Campbell, Carlson, Carpenter, Claeys, Corbet, Crum, DeGraaf, Dove, Edmonds, Edwards, Esau, Gandhi, Garber, Goico, Grosserode, Hawkins, Hedke, Hermanson, Highland, Hildabrand, Hoffman, Houser, Howell, Huebert, Hutton, Jones, Kelley, Kinzer, Kleeb, Lunn, Macheers, Mast, McPherson, Meigs, Merrick, O'Brien, Osterman, Peck, Powell, Read, Rhoades, Rothlisberg, Rubin, Ryckman Jr., Schwab, Shultz, Siegfreid, Suellentrop, Sutton, Thimesch, Todd, Vickrey.
Nays: Alcala, Alford, Ballard, Becker, Bideau, Boldra, Bollier, Burroughs, Carlin, Cassidy, Christmann, Clayton, Concannon, Davis, Dierks, Dillmore, Doll, Ewy, Finch, Finney, Gonzalez, Grant, Henry, Hibbard, Hill, Hineman, Jennings, Johnson, Kelly, Kuether, Lusk, Meier, Menghini, Moxley, Pauls, Perry, Petty, Phillips, Proehl, Rooker, Ruiz, Ryckman Sr., Sawyer, Schroeder, Schwartz, Seiwert, Sloan, Sloop, Swanson, Tietze, Trimmer, Victors, Ward, Waymaster, Weber, Weigel, Whipple, Winn.
Absent or not voting: Barker, Bridges, Bruchman, Frownfelter, Henderson, Houston, Kahrs, Lane, Montgomery, Peterson, Wilson, Wolfe Moore.

Although the bill was defeated, the Legislative Coordinating Council, composed of legislative leaders, could use its authority to appoint a special interim committee to study educational standards and assessments prior to next session.  If fact, the LCC will have to appoint a special committee if any legislative studies of educational issues are conducted, because another bill passed Saturday, HB 2216, eliminates the joint Legislative Educational Planning Committee, along with six other permanent joint committees that have focused on specific topics when the Legislature is not in session.

For information about the Common Core controversy, see the Tallman Education Report, May 30.

Tax Bill

The major issue that extended the 2013 Legislative session from its planned 80 days to the wee hours of the 100th (although technically a continuation of day 99) was the Governor’s request for a tax bill to shore up current state revenues after last year’s massive income tax cut bill, while also providing further income tax cuts on what he calls the “glide path to zero (income tax).”

Governor Brownback and the Senate wanted to keep the state sales tax rate at 6.3 percent permanently, rather than dropping to 5.7 percent on July 1 as provided by the temporary increase approved three years ago.  Until Saturday, the House had rejected keeping any part of the higher rate, but the conference committee report on HB 2059 makes the rate 6.15 percent.  The bill also raises revenue by trimming both itemized and standard income tax deductions.  Those increases are offset by phasing-in further income rate reductions, which increase through 2018.

The net impact of the bill is estimated to increase state revenues by $777 million over the next five years, leading opponents – especially Democrats who opposed the higher sales tax rate – to call the bill a tax increase.  Supporters of the bill argued the revenue was necessary to maintain core government services, and should be viewed in the context of last year’s income tax cuts.  In fact, last year’s tax cut bill was projected to reduce state revenues (tax collections) by $4.54 billion over the six years between 2013 and 2018.  Even with the tax increases in this bill, Kansas taxpayers are projected to see a net six year reduction of $3.76 billion, but with a higher share of revenue coming from sales tax and lower share from income tax.
To put that in context, $3.76 billion spread over six years would provide $752 million per year.  If K-12 education received 50 percent of those revenues, it would mean $376 million for school districts annually, which would fund the entire shortfall in local option budget state aid ($90 million), restore capital outlay state aid ($23 million), and increase base state aid per pupil by almost $390.

Without increased revenues, the budget adopted by the Legislature was projected to face a $157 million or 2.6 percent deficit in Fiscal Year 2015.

KASB supported increased revenue to avoid further cuts in education funding, but expressed deep concerns about further tax cuts which would limit future funding.  Under this tax bill, state general fund revenues are expected to be less than projected spending every year through 2018, reducing the SGF ending balance from 10.0 percent to a small deficit of 0.4 percent.  These projections are based on “normal” income growth, which does not consider either additional economic growth due to the tax cuts, or reduced revenue if economic growth slows or falls into recession.

The Senate approved HB 2059 on a vote of 24- 13, as follows:

Yeas: Abrams, Apple, Arpke, Bowers, Bruce, Denning, Fitzgerald, Kerschen, King, Knox, LaTurner, Longbine, Love, Lynn, Masterson, Melcher, O'Donnell, Olson, Petersen, Pilcher-Cook, Powell, Smith, Tyson, Wagle.
Nays: Faust-Goudeau, Francisco, Haley, Hawk, Hensley, Holland, Kelly, McGinn, Ostmeyer, Pettey, Pyle, V. Schmidt, Wolf.
Absent or Not Voting: Donovan, Emler, Holmes.

The House vote was 69- 45 as follows:

Yeas: Alford, Bideau, Boldra, Bradford, Brunk, Couture-Lovelady, Campbell, Carlson, Carpenter, Cassidy, Claeys, Concannon, Crum, Dierks, Doll, Dove, Edwards, Ewy, Gandhi, Garber, Goico, Gonzalez, Hawkins, Hedke, Hermanson, Highland, Hill, Hineman, Hoffman, Houser, Howell, Huebert, Hutton, Jennings, Johnson, Jones, Kelley, Kelly, Kinzer, Kleeb, Lunn, Macheers, Mast, Meigs, Merrick, O'Brien, Petty, Phillips, Proehl, Read, Rothlisberg, Rubin, Ryckman Jr., Ryckman Sr., Schroeder, Schwab, Schwartz, Seiwert, Shultz, Siegfreid, Sloan, Suellentrop, Sutton, Swanson, Thimesch, Todd, Vickrey, Waymaster, Weber.
Nays: Alcala, Ballard, Becker, Bollier, Bruchman, Burroughs, Carlin, Christmann, Clayton, Corbet, Davis, DeGraaf, Dillmore, Edmonds, Esau, Finch, Finney, Grant, Grosserode, Henry, Hibbard, Hildabrand, Kuether, Lusk, McPherson, Meier, Menghini, Moxley, Pauls, Peck, Perry, Powell, Rhoades, Rooker, Ruiz, Sawyer, Sloop, Tietze, Trimmer, Victors, Ward, Weigel, Whipple, Wilson, Winn.
Absent or not voting: Barker, Bridges, Frownfelter, Henderson, Houston, Kahrs, Lane, Montgomery, Osterman, Peterson, Wolfe Moore.

Budget for Fiscal Years 2013, 2014 and 2015

For the first time, the Legislature approved a two-year budget, which KASB supported.  For K-12 education, the budget is expected to keep base state aid per pupil at $3,838 in the current year and next year, with a small increase due to anticipated higher revenue from the 20 mill statewide levy in 2015.  No change is provided for local option budget state aid, which will result in further proration and probable mill levy increases or budget cuts for districts which receive such aid.  No increase is provided in special education state aid, which means the “excess cost” percentage is likely to further decline.

The budget also replaces state general fund dollars with transfers from the state highway fund in both 2014 and 2015 to help finance transportation weighting and special education transportation aid.  This change reduces the amount of funding from the state general fund, but does not change the amount of money districts will receive.

The budget provides increases in school district capital improvement (bond and interest) aid and KPERS employer contributions based on the estimated formula requirements of these programs.
The budget adds $250,000 per year for two years for the Communities in Schools program, which KASB supports.  It also provides $6 million for each of the next two years from the Children’s Initiatives Fund for grants to support the Lexia reading program in elementary schools, unless the Governor’s Read to Succeed program passes (which it did not this session).  KASB supported additional funding for reading interventions under the Governor’s proposal.

Total state general fund expenditures were reduced from $6.164 billion in the current year to $5.965 billion next year and $6.121 in FY 2015.  Over the past year, Governor Brownback consistently opposed reductions in state funding for education, and K-12 funding was one of the few major budget areas that was not reduced (although some funding was replaced with highway fund transfers).  Higher education funding was generally reduced 1.5 percent.

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