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Minutes for SB44 - Committee on Senate Select Committee on Education Finance
Short Title
Appropriations for the department of education for FY 2019, 2020 and 2021; increasing BASE aid for certain school years; continuing 20 mill statewide levy for schools and exempting certain portion of property used for residential purposes from such levy.
Minutes Content for Tue, Feb 12, 2019
Chairperson Baumgardner noted this is the second day of testimony for SB 44. She stated the Committee would hear from four additional proponents and one opponent, as well as one more written proponent testimony.
John Hess, Fiscal Analyst, Kansas Legislative Research Department (KLRD), gave a brief overview of the 1.44 percent inflation rate and how this rate was determined.
Chairperson Baumgardner asked Mr. Hess to discuss the three year rolling average of the Midwest CPI-U inflation rate. Mr. Hess noted in current statute, there is a three year rolling average of the CPI-U for the Midwest region. He noted under current law, starting in fiscal year (FY) 2024, the BASE amount will increase by the average of the three immediately preceding years in the Midwest CPI-U; in FY 2024, it would take the CPI for each of the years FY 2021, FY 2022, FY 2023, average them together, and then the Base Aid for Student Excellence (BASE) would increase by that amount starting in FY 2024, and calculated each year thereafter. He noted beginning in FY 2020, the artificial base for the local option budget is scheduled to increase by that same three year rolling average of the Midwest CPI-U.
Chairperson Baumgardner asked Mr. Hess about the scheduled new money that would be added to FY 2020. Mr. Hess noted information could be found in the memorandums that were provided to the Committee on February 6, 2019. He stated the scheduled all funds increase for FY 2020 is approximately $109 million over the prior year, and includes increases to the 20 mills over the previous year. He stated the State General Fund (SGF) increase for the school finance major categories of state aid from FY 2019 to FY 2020, according to the Fall 2018 Education Consensus Revenue Estimates (CRE), is approximately $89.3 million, so the remainder of the growth is from the 20 mills. He noted growth in SGF revenues from the November CRE. He also noted the State Board of Education (State Board) has recommended to take $360 million in expenditures and divided it over four years: $92.7 million in FY 2020, $89.7 in both FY 2021 and FY 2022, and $91.7 in FY 2023, as its proposed Gannon VI remedy. He noted the State Board and the Governor have made that recommendation.
Ranking Minority Member Hensley asked if the Supreme Court looked at the provision related to the artificial base and the three year rolling average. Tamera Lawrence, Office of Revisor of Statutes, responded she does not recall the Court specifically addressing the artificial base component. She noted it was included in the school finance formula and the Court accepted the structure of the formula as a whole. Chairperson Baumgardner responded that the Committee could revisit this issue at the end of the hearing.
Mark Tallman, Associate Director for Advocacy, Kansas Association of School Boards (KASB), provided proponent testimony. (Attachment 1) Mr. Tallman discussed the five reasons that the KASB believes SB 44 is a good bill. His testimony included how the bill helps settle the Gannon school finance case by restoring funding to constitutional levels, how it helps restore Kansas school funding compared to other states, how school funding would remain low compared to total state personal income, and how and why increased funding improves education.
Terry Forsyth, Director, Kansas National Education Association (KNEA), provided proponent testimony. (Attachment 2) Mr. Forsyth discussed KNEA support of the bill if passed without amendments. He commented the inflation rate is probably low, but the KNEA lobby team is willing to accept that rate.
Judith Deedy, Executive Director, Game On for Kansas Schools, provided proponent testimony. (Attachment 3) Ms. Deedy noted the importance of adding funding for inflation during the phase-in of the plan passed by the Legislature. She urged the Committee to end the Gannon litigation in a timely manner so school districts can plan their budgets.
Devin Wilson, State Legislative Chair, Kansas Parent Teacher Association (PTA) provided proponent testimony. (Attachment 4) Mr. Wilson discussed the reasons the PTA believes SB 44 keeps with their legislative priorities which includes restoring public school funding to a constitutional level of adequacy, creating additional opportunities to achieve, ending the Gannon litigation, providing stability and predictability, and how educational funding makes a difference in students' educational outcomes.
Chairperson Baumgardner noted Dr. Chad Higgins, Superintendent, Maize USD 266, provided written-only proponent testimony. (Attachment 5)
Chairperson Baumgardner called on the conferees testifying as an opponent to the bill.
Dave Trabert, President, Kansas Policy Institute (KPI), provided opponent testimony. (Attachment 6) Mr. Trabert discussed the three key area's of opposition that KPI has on the bill, including judiciary having no constitutional authority to order an appropriation, funding increases do not cause student achievement to improve, and additional funding will cause existing long-term budget deficits to become worse. He provided a chart comparing school spending to money per pupil, inflation, 4th grade proficiency and 8th grade proficiency. His testimony also included a KLRD profile prepared for Senator Tom Holland of SGF amounts approved for FY 2019 and the estimated amounts for FYs 2020-2023. Mr. Trabert discussed an additional document that he stated was new and was not available when he submitted his testimony. (Attachment 7) This document is a profile prepared by KLRD at the request of a legislator, and based on the Governor's proposals keeping an ending balance of 7.5 percent. He noted the profile includes Medicaid spending at $100 million per year, does not include reamortization of the Kansas Public Employees Retirement System (KPERS), but does include keeping all the federal windfall, which would result in a $1.6 billion deficit over the next four years. He stated there are many reasons why KPI opposes the bill, mostly because of constitutional issues and it will not help students.
Chairperson Baumgardner asked the Committee if they had any questions of conferees or staff.
Vice-Chairperson Denning asked if KPERS is included in the CPI calculation. Ms. Lawrence responded that the CPI for the Midwest region beginning in school year 2023-2024 is specifically applied to the BASE aid amount, so it does not include KPERS.
Chairperson Baumgardner asked Ms. Deedy if parent fees have decreased with the additional funding going to schools in the last few years. Ms. Deedy responded that from personal experience she has seen some decreases and relaxation of fees.
Ranking Minority Member Hensley questioned Mr. Trabert about the chart included in his testimony that was prepared by KLRD for Senator Holland. He noted the purpose of the profile was to show what the impact of SB 22 would be if it passed. Mr. Trabert responded his testimony was created for the meeting last week and this was the current material he found. Mr. Trabert stated the profile shows there would still be a deficit under the Governor's budget, and noted the deficit would be greater if it was based on having a legal ending balance. Mr. Trabert stated the standard KLRD profile does not comply with state law, as it does not recognize the statutorily required 7.5 percent ending balance. Mr. Trabert stated another profile was prepared at the request of KPI, with the assistance of a legislator, to understand what the real impact would be on the state budget. He noted the profile he included in his testimony let the state of Kansas keep all the windfall. Senator Hensley questioned why KPI attributed the profile to Senator Holland and a discussion ensued. Senator Hensley noted the profile was not the same profile that Senator Holland passed out on the Senate floor. Chairperson Baumgardner asked the record reflect that Senator Holland did not prepare the profile and the profile indicates it was prepared by KLRD. Senator Hensley and Mr. Trabert had further discussion on the appropriateness of producing this document and the accuracy of its contents. Senator Hensley asked Mr. Trabert what the KPI's position was on SB 22. Mr. Trabert responded KPI believes this money belongs to citizens and should be returned to them. He stated they support SB 22.
Chairperson Baumgardner asked staff to discuss the KSDE budget recommendation, and specifically what happens in FY 2024. She stated at that point in time the Supreme Court had identified the inflation needed to be addressed or compensated. Mr. Hess responded the three year rolling average adjustment to the BASE begins in FY 2024, and that is when the BASE would start increasing in statute by the average of the three immediately preceding years for the Midwest CPI-U.
Chairperson Baumgardner stated there was an increase in the BASE occurring in 2019-2023. She asked what happens for funding schools in FY 2024 when the rate of inflation is no longer mandated by the Supreme Court and is not part of the KSDE's budget recommendation. She noted it has been suggested in several publications that the law-suite goes away, but they do not discuss the fifth year when there is no longer a mandated inflation rate. J.G. Scott, Assistant Director for Fiscal Affairs, KLRD, responded that the current funding formula has a three year average of the CPI-U, so once that calculation is completed, the three year average would be applied to the final year and would increase that percentage in the fifth year. He noted that calculation would continue until the law is changed. He noted as long as inflation and SGF receipts were going along the same rate of increase, assuming everything else is flat, there should be about half of the inflation factor going into education and half for everything else. He provided an example using 2.5 percent. He noted it would be a compounding increase that would go to the BASE, as the law is currently written.
Chairperson Baumgardner asked what the amount would be using the 2.5 percent example and Mr. Scott responded it would be around $121 to the BASE each year. He noted the current BASE is going up $130 per year.
Chairperson Baumgardner asked the KASB to respond to concerns of funding going to the BASE that may make it harder to increase teacher pay or student programing. Mr. Tallman responded that KASB has consistently heard from members that the BASE is what drives the formula and that is where the focus should be. He noted if the BASE is going up equal to the rate of inflation, that means the core operating budget, including all the weightings, will go up per child by an amount every year equal to the overall inflation rate. He stated a declining enrollment district will have to eventually cut costs because there are fewer kids. He provided additional information on the effects of inflation on the BASE.
Chairperson Baumgardner asked Mr. Tallman what schools are doing differently to ensure different outcomes for the 25 percent of students that have been identified as underachieving. Mr. Tallman responded by discussing the additional funding for at-risk and area's that would benefit from this funding. Chairperson Baumgardner asked if Mr. Tallman is concerned with the Legislative Post Audit report that looked at special education and the optimum ratio of special education faculty as opposed to paraprofessionals. The Chair asked Mr. Tallman to provided follow-up material, including what school districts are doing to adjust the special education ratio to follow the best practices identified by the LPA audit, a complete line chart comparing all states, and what specifically KASB has identified or initiated in the last two years as far as programs for identified at-risk students and what data is being tracked. Mr. Tallman provided this follow up material and data on February 25, 2019. (Attachment 8)
Senator Pettey asked if the KNEA could provide a table with how Kansas ranks salary wise, and Chairperson Baumgardner asked the KNEA for a listing of all the school districts that in the last two years have had increased salaries though negotiations, and the resulting increase. She also asked for a comparison for what increases have been for administrative pay if it is different for the educators increases. Mr. Forsyth provided follow up material on February 20, 2019. (Attachment 9) (Attachment 10) (Attachment 11)
The meeting was adjourned at 2:34 p.m.
