Topeka Kansas legislators struggled Wednesday to resolve how to satisfy the federal government's demands that the state boost spending on special education programs in public schools without undercutting Gov. Sam Brownback's effort to trim the current state budget.
House and Senate budget negotiators resumed talks on a bill sought by Brownback to revise the current budget. The negotiations stalled last week, and the key disagreement was about special education funding.
State officials said the U.S. Department of Education has warned Kansas that federal law requires the state to increase its special education funding by more than $26 million. Otherwise, the state faces the loss of the same amount of federal funds every year going forward.
Senators voted to add money to the current budget to cover the cost, but that action went against Brownback's efforts to reduce overall spending. The House had sided with Brownback.
The negotiators were reviewing rival proposals Wednesday. One plan from senators would delay a scheduled quarterly payment by the state to the pension fund for teachers and government workers, temporarily freeing up funds to cover the special education costs. The other, from the House, would cover the same costs by diverting funds from the state's base aid for its 289 school districts.
Brownback has endorsed the House plan but hasn't taken a stance on the Senate proposal. House members weren't saying much about the rival proposal.
"I want a bill that can pass the House and Senate," Landon Fulmer, Brownback's policy director, said as he went into a meeting with the House negotiators at midday.
Brownback wants to cut $38 million in spending from the current budget, leaving cash reserves of about $35 million when the new fiscal year begins July 1. Both the savings and the reserves would roll over, helping reduce a $492 million shortfall projected for the next fiscal year.
The House's version of the budget bill met the goal. The Senate's version would have left cash reserves of less than $3 million, compared with the $5.76 billion in spending financed by state tax dollars.
But a majority of senators considered it irresponsible to risk a loss of federal special education dollars.
"What we're trying to do is make sure we don't lose federal special education money in perpetuity," said Senate Ways and Means Committee Chairwoman Carolyn McGinn, a Sedgwick Republican.
The special education problem concerns the state's use of federal economic stimulus dollars to help support special education programs over the past two years. Federal law allowed it but required the state to maintain a minimum level of funding, based on a complicated formula. Federal officials have now concluded the state didn't comply.
Last week, Brownback's budget director, Steve Anderson, said the cost of complying could be as high as $61 million, but the governor's office and state Department of Education were confident Tuesday in the $26 million figure.
The House plan was outlined in talks Tuesday by House Appropriations Committee Chairman Marc Rhoades, a Newton Republican.
It would cover the cost by the end of June by diverting money from the state's contributions to pensions for teachers and government workers. Then, as soon as the fiscal year begins July 1, the same amount would be diverted into the pension system from school districts' base aid.
The result is that base aid would drop $40 per student, in addition to a cut of $232 per student that Brownback already has proposed because of the state's financial problems. With the latest plan and his previous budget recommendations, the base aid figure would decline from $4,012 to $3,740, a drop of almost 7 percent.
Senators didn't like that last element and so on Wednesday, their negotiators proposed delaying a $69 million contribution to the pension system from April 15 until after July 1.
The state could then cover the special education costs without cutting schools' other aid, and it would carry reserves of $83 million into the next fiscal year. Of course, those reserves would dwindle immediately when the state caught up to making the pension payment, and the decision could complicate budgeting for the next fiscal year.
"We still need to confer about it," Rhoades said when asked his opinion of the Senate plan.