Kansas budget director says funding increases can be paid for with existing revenues; doubts expressed

State Budget Director Shawn Sullivan answers reporters questions Wednesday, Jan. 10, 2018, during a briefing on Gov. Sam Brownback's plan to phase in a 00 million per-year increase in K-12 education funding over five years

? Gov. Sam Brownback’s budget director said the state should be able to pay for the proposed five-year, $600 million increase in school funding, plus a few other enhancements in the state budget, all within existing resources, an assertion that many state lawmakers have said they believe is unlikely.

Budget Director Shawn Sullivan briefed news outlets about the governor’s plan early Wednesday morning, then went before both the House and Senate budget committees, where he underwent intense, but otherwise polite, questioning.

The plan calls for adding roughly $100 million directly into base per-pupil funding for public schools over each of the next five years. In addition, it takes credit for the $87.8 million base funding increase for the fiscal year beginning July 1 that lawmakers approved last year, despite Brownback’s objection to it. And it provides another $6 million to address some equity issues that the Supreme Court took exception to in its most recent school finance decision.

That brings the grand total to $600.8 million, according to Sullivan. Of that, however, only $512.2 million is new money not already approved by lawmakers.

Sullivan said the plan can be funded without a tax increase due to national economic growth, as well as the roughly $600 million-per-year income tax increase that lawmakers passed last year by overriding Brownback’s veto of it.

State Budget Director Shawn Sullivan answers reporters questions Wednesday, Jan. 10, 2018, during a briefing on Gov. Sam Brownback's plan to phase in a 00 million per-year increase in K-12 education funding over five years

“Currently the sales tax is growing by 3.6 percent. The last several years, it’s been flat,” Sullivan told reporters. “The corporate tax is growing 25 percent. In previous years it’s been negative.

“The second thing is, yes, a $591 million income tax bill was passed last session, so that certainly plays into all this as well,” he added.

According to budget projections, those increases, along with others for increased social service funding and employee pay raises, would still leave the state with positive ending balances in the current fiscal year and the next.

Beyond that, however, it remains uncertain where the state would get the money to fund such a plan. And even in the first two fiscal years, Brownback’s plan relies on continuing the policy lawmakers made last year to delay payments into the Kansas Public Employees Retirement System, sweeping money out of highway programs to shore up the state general fund, and not restoring cuts that Brownback ordered in 2016 to higher education.

Rep. Barbara Ballard, D-Lawrence, who serves on the House Appropriations Committee, said that was a concern for her.

“I have a little concern when you say within existing resources, because last year we were more than $900 million in the hole,” she said in an interview after the committee briefing, referring to what was then a two-year projection of the state’s fund balances. “We made these changes, and I think people know what we did. … But that didn’t solve the problem. We still are like $300 million (in the hole). We haven’t identified how we’re going to make that up.”

Sen. Carolyn McGinn, R-Sedgwick, who chairs the Senate Ways and Means Committee, expressed the same concern.

“I have big concerns that we’re just going to be putting ourselves in another spending problem,” she told reporters after the Senate committee briefing.

Those most upset about the governor’s plan, however, appeared to be conservative Republicans who have traditionally been Brownback’s strongest allies.

Among those was Rep. Bill Sutton, R-Gardner, who noted that it wasn’t long ago that Brownback vetoed the 2017 tax increase and criticized lawmakers for adding too much to K-12 spending.

“It just seems to me that maybe that $600 million is being viewed as necessary after all, and that’s shocking to me,” he said to Sullivan during the briefing.

Rep. Brenda Landwehr, R-Wichita, also questioned why the governor wasn’t proposing any tax cuts or spending decreases.

“If you’re asking, ‘did we make any widespread cuts?’ No. But you all feel free to propose them,” Sullivan replied.

Conservative criticism extended outside the Statehouse as well.

Following Brownback’s State of the State address Monday evening, Dave Trabert, president of the right-leaning Kansas Policy Institute, posted an article on his blog with the headline, “2018 State of the State Fails Students.”

And Ian Fury, a former aide in Brownback’s communications office who now works for the Kansas chapter of the conservative group Americans for Prosperity, posted a series of tweets critical of the budget, including one that read: “Kansas will never spend its way to prosperity. Government can never hope to achieve that. This budget only worsens the problem of over-expansive government.”

Other provisions

Overall, the budget calls for increasing state spending by $34.5 million in the current fiscal year that ends June 30, and another $290.3 million the following year.

In order to fund the increase in school spending and other budget requests, the administration has rejected some funding increases from other agencies, most notably the Board of Regents, whose top legislative priority this year is full restoration of the 4 percent allotment cuts to state universities that Brownback ordered in May 2016 in the face of revenue shortfalls.

For the University of Kansas, that translated to a combined $10.7 million cut to the Lawrence and KU Medical Center campuses. Although about $3 million of that was restored in the 2017 budget bill, KU officials were hoping to see the remaining $7.7 million restored this session.

The administration also rejected a request by the Judicial Branch for funding to increase salaries for judges and other court employees, something the courts have sought several years in a row because their pay is significantly below that of their peers in other states.

The budget does, however, include a Regents request for $3 million to help launch a dental school at the KU Medical Center. Unlike a similar proposal Brownback made last year, and lawmakers rejected, this year’s request is to help pay for start-up operational costs of such a school, instead of funding for construction, which the Regents now say they can pay for with revenue from a statewide property tax levy for educational buildings.

The plan also includes the $16.5 million in increased funding for child welfare services that Lt. Gov. Jeff Colyer and Department for Children and Families Secretary Gina Meier-Hummel announced on Monday.

In the area of health care, Brownback’s budget includes nearly $40 million next fiscal year, in both state and federal money, to increase Medicaid reimbursement rates for hospitals and nursing homes.

It does not, however, include any provision for expanding Medicaid under the Affordable Care Act, something lawmakers passed by a wide margin last year, but which Brownback vetoed.

And it includes $10.7 million for employee pay raises at the Department of Corrections, nursing home inspectors, and for executive branch employees who were left out of the pay plan that lawmakers approved last year. Regents employees, however, are not included in those pay raises.

Brownback responds to budget criticism

Gov. Sam Brownback issued a statement late Wednesday defending his budget proposal, which includes phasing in a $600 million increase in school funding over five years, but not restoring cuts previously made to universities, the state highway program or the Kansas Public Employees Retirement System.

“While I recognize the proposed budget has drawn criticism from legislators on both sides of the aisle, complying with the Supreme Court’s school finance decision is not optional,” he said in a statement emailed to reporters.

“I support the rule of law, and I will not stand to see schools closed because of inaction on our part,” he continued. “Thankfully the economy is stronger than it has been, however we recognize the additional money to schools will strain our ability to address other core government functions in future budgets.”

On Oct. 2, the Kansas Supreme Court declared current school funding unconstitutional because it is both inadequate and inequitable. Although the court did not order a specific amount of funding that needs to be added, Brownback’s office noted that the general consensus among education officials is in the neighborhood of $600 million a year.

The court has given the state a deadline of April 30 to file briefs explaining what action the Legislature has taken to fix the problems in school funding, and it has said it will not allow the state to operate an unconstitutional school finance system beyond June 30, a statement seen as a threat that it would order public schools closed after that date.

Brownback first announced his plan to phase in that amount over five years during his State of the State address Tuesday. Details of the plan were released to lawmakers and the news media on Wednesday.

“We look forward to continuing these conversations with the Legislature to find a solution that meets the Court’s demands and keeps our schools open,” he said in the statement. “It is neither constructive nor wise to hold hostage other critical initiatives, due to political gamesmanship over disagreement on the school funding piece of my proposal.”