Shawn Sullivan, the governor's budget director announced Thursday afternoon, July 30, 2015, that the governor will issue 2.6 million in budget cuts and fund transfers to shore up the state’s cash reserves. (Thad Allton/Topeka Capital-Journal via AP)

Topeka ? Gov. Sam Brownback’s administration unveiled nearly $63 million in general fund spending cuts and other savings, but said those budget changes should not have a direct effect on state services.

“There are a couple things you could call pure cuts or reductions, but what we tried to do was to minimize the impact on services,” budget director Shawn Sullivan said.

Kansas lawmakers made the cuts part of the tax and spending package they approved at the end of the 2015 session. Lawmakers had assumed the administration would find at least $50 million in cuts or other savings, but gave the administration authority to cut as much as $100 million.

Sullivan noted that the administration was not legally required to make the cuts. But not doing so would have left the state with a projected ending balance of just $17 million when the new fiscal year ends June 30, much lower than most officials are comfortable with.

Kansas Budget Director Shawn Sullivan outlines 2.6 million in fund transfers and general fund spending cuts during a statehouse news conference Thursday, July 30.

The cuts may also be important to the bond markets. The state is planning to issue $1 billion in pension obligation bonds, possibly by the middle of next month, to shore up the troubled Kansas Public Employees Retirement System. Sullivan said the administration wants to include the budget changes in a bond disclosure document that is planned for release Friday.

The largest single reduction in state general fund spending, $17.7 million, will come from the State Children’s Health Insurance Program, a joint state and federal program that provides coverage to uninsured children in working families that earn too much to qualify for Medicaid. Sullivan said the cut was made possible because the federal government increased its share of payment for the program.

“This does not lead to any sort of expenditure reduction or any change in the program,” Sullivan said.

He said the federal government recently increased its match rate, from about 70 percent to 92 percent as an incentive for states to increase the level of services they provide, up to the same level of services offered under Medicaid. But he said Kansas already offers similar levels of service, and therefore the increased federal match could be used to reduce state general fund expenditures in that program.

Another major source of savings will come from sweeping about $9 million in funds that state agencies had carried over from last fiscal year. The biggest chunk of that, about $7 million, is money that was earmarked in the Department of Education for KPERS contributions for school district employees, the result of budget officials over-estimating how much would be owed for pensions, based on the number of employees and their average salaries.

Other major adjustments include:

• $4 million from a program that draws down additional Medicaid reimbursement for hospitals. Sullivan said that program drew down $4 million more than expected last year.

• $8 million from the Kansas Department of Transportation that resulted from “efficiencies” that were implemented last year in the agency’s operations. Sullivan said that cut will have no impact on the ongoing T-Works highway construction program.

• $2.2 million from the Department of Commerce, where expenditures from the Children’s Initiative Fund and Economic Development Initiative Fund were less than expected last year. That money will be moved into the state general fund.

• And $2.8 million to be transferred from the Children’s Initiative Funding to the general fund because expenditures for the Lexia reading program were less than expected last year.

A full list of the budget adjustments is available on the Division of Budget’s website: www.budget.ks.gov.

With the budget adjustments announced Thursday, Sullivan said the projected ending balance for the general fund is now about $78 million.

Republican leaders in the Legislature generally praised the announcement.

“We can’t cut income taxes, as we have done, without also reducing government spending,” Senate President Susan Wagle of Wichita said. “I applaud the administration and look forward to joining my colleagues in January to find more efficiencies and to further the cause of right sizing government, so that Kansans have more money in their pocket.”

But House Democratic Leader Tom Burroughs said the state’s budget is still fundamentally out of balance, and he blamed Brownback for what he called “failed fiscal policies.”

“Once again, the governor is relying on one-time funds and fee sweeps,” Burroughs, D-Kansas City, said. “For the state to return to firm financial footing, we need a responsibly balanced budget accompanied by sustainable revenue.”