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Archive for Monday, May 27, 2002

Tobacco fund raid criticized

Money for children’s programs would go toward school funding

May 27, 2002

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— Some lawmakers say Gov. Bill Graves should veto a raid of tobacco settlement funds that is being used to increase school funding by one-half of 1 percent.

"Raiding this trust fund sets a terrible precedent," Rep. Rocky Nichols, D-Topeka, said. "Gov. Graves could line-item veto this raid, and the schools would still get their money."

In the legislative session that ended last week, lawmakers approved taking $11.5 million from a trust fund for children's programs that had been funded by moneys from Kansas' share of the legal settlement with major cigarette and tobacco companies.

That $11.5 million was to be deposited in the state's all-purpose general revenue fund. The deposit would then free up $11.5 million in general revenue for public schools, which would increase base state aid per pupil from $3,870 to $3,890, a $20 increase per student.

Graves' office said it could not respond to Nichols' comments. Graves is visiting China this week and has not yet had the opportunity to analyze the clean-up budget bill that contains the school funding measure, a spokesperson said.

Lawmakers who supported the proposal said it was the only way to get additional funds for public schools in a year of slumping tax revenue.

But Nichols, the ranking Democrat on the House budget-writing committee, said the additional funds come at a high cost. Raiding the trust fund, he said, will diminish interest earnings from the trust fund in future years and deny children access to helpful programs.

Rich Minder, projects coordinator for the Success By 6 Coalition of Douglas County, agreed.

Lawmakers had earlier promised to build up the trust fund "but to solve the short-term budget crisis, they've essentially gone back on their promise," he said.

The Success By 6 Coalition works to help children and families and receives funding from tobacco settlement moneys.

The trust fund was set up to enhance or expand children's programs instead of being used to finance ongoing expenses, such as public school education.

Faced with budget deficits this session, lawmakers approved a nearly $300 million tax increase by increasing state sales, cigarette, motor fuels and inheritance taxes. And the Legislature reduced the amount required for the state to have in its year-ending balance.

But Graves has said that even with the tax increases and other changes, the budget will be tight, and he may have to cut more funding.

Still, Nichols said there is room in the $4.4 billion budget to find $11.5 million for schools without raiding the tobacco trust fund.

"If the governor wants to make it a priority to not rob the children's trust fund, he can do it," Nichols said.

Under additional legislative action taken this past session, the tobacco trust fund also may be hit for another $6 million for state cash-flow purposes, although the spending bill requires that the those funds be replenished in the next fiscal year.

The trust fund was projected to have $27.3 million at the end of the next fiscal year, June 30, 2003, according to Joyce Cussimanio, executive director of the Kansas Children's Cabinet, which recommends uses for tobacco funds. Now that will be reduced to $9.8 million, she said.

"Clearly, it reduces the money that is earning interest by two-thirds," Cussimanio said.

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