FRANKFORT — I would like to give you a report on the $20.3 billion two-year state Executive Branch budget that we passed on Monday and sent to the governor, just in time for his 10-day session veto recess that began Tuesday.
With our passage of this bill — HB 235 — our biggest job this budget session is behind us. We still have two days to consider overriding any vetoes to HB 235 and any other bills when we return to Frankfort to close out the session on April 14 and 15. We will also consider final action on our state Transportation budget and coal severance projects when we return for those two days (and I will discuss those bills in a later article).
Overall, HB 235 will fund all operations of state government through fiscal year 2016. It will add around $189 million in base per-pupil funding for K-12 education, preserve funding for Medicaid, PVAs, prosecutors, Corrections, and add around $1.5 billion in new spending for capital construction while requiring five percent spending reductions from many state agencies. Let’s focus first on what the budget does for education.
For public schools: HB 235 includes language directing that any unused SEEK funds be allocated to the Kentucky Teachers’ Retirement System and applied to the pension system’s unfunded liability, rather than lapse to the state’s coffers. For teachers and all school employees, it will increase salaries by one percent in fiscal year 2015 and two percent in fiscal year 2016. Additionally, the budget includes debt service fund totaling $8.76 million for offers of assistance to school districts that were authorized in 2012, and authorizes the School Facilities Construction Commission to make an additional $100 million in offers of assistance to school districts over the next two years (with funding for those offers expected in the 2016-2018 biennium). This will help fund around $20 million dollars of new construction and improvements for the Bell County School System.
A total of $3.3 million in 2015 and $6.6 million in 2016 for K-12 education technology are also found in the budget, along with: an additional $18.7 million in fiscal year 2016 for expanded preschool to families with incomes up to 160 percent of the poverty level; $16.7 million each year for instructional resources; $672.7 million in fiscal year 2015 and $686.1 million the next year to provide health insurance for local school district employees; and an additional $3 million each year of the biennium for additional staff at vocational/technical school for the College/Career Readiness Program. We also added $2 million over the biennium to fund the important work carried out by our Family Resource Centers and Volunteer Services.
For state university and college operating budgets: HB 235 makes smaller cuts than originally proposed by the governor: reductions will be 1.5 percent rather than 2.5 percent, with bond authorizations for many university projects restored. Community and technical college budgets will also be reduced by 1.5 percent instead of 2.5 as proposed earlier, with those institutions’ capital projects paid for with student fees and private donations. This includes a new $10 million facility at the Middlesboro campus of SKCTC
The budget will also add $743 million in new General Fund bonds and $721 million in new agency bonds for capital construction, mostly in the area of postsecondary education. What’s more, HB 235 maintains the current level of state support for the College Access Program (CAP) at $58.8 million, keeps support for the Kentucky Tuition Grant (KTG) Program, or KAPT, at $31.7 million (while providing another $750,000 in state General Fund support in each year of the biennium for CAP and KTG), and maintains support for the Teacher Scholarship Program and the National Guard Tuition Assistance Program at $1.7 million and $4.9 million, respectively.
The budget also fully funds the critically important KEES merit college scholarship program for our high school students. And, for our Kentucky Community and Technical College System, it provides restricted fund support of $40.16 million in fiscal year 2015 and $40.75 million in fiscal year 2016 for the Firefighters Foundation Program Fund.
Also included in HB 235 are pay raises for state workers throughout all branches of state government of between 5 percent and 1 percent in fiscal year 2015 and 1 percent in fiscal year 2016. Salary increases will be given accordingly in fiscal year 2015: Employees making up to $27,000 a year will receive a 5 percent raise; those making $27,000.01 to $36,000 will receive a 3 percent raise; those making $36,000.01 to $50,000 will receive a 2 percent raise; and those making $50,000.01 and above will receive a 1 percent raise. As I mentioned, all employees will receive a 1 percent raise in the second year.
Additionally, HB 235 provides: full funding of the actuarial required contribution (ARC) to Kentucky’s public pension system; over $200 million each year of the biennium to continue KCHIP (Kentucky Children’s Health Insurance Program) for around 68,000 children; additional funding to boost foster care rates; $400,000 in each year of the biennium for the Bluegrass Challenge Academy and $400,000 in each year for the Appalachian Youth Challenge Academy; $300,000 in state support in fiscal year 2015 for a grant to the National Guard Foundation for a memorial; an additional $500,000 over the biennium for domestic violence shelters and rape crisis centers; $38 million in fiscal year 2015 and $58 million in fiscal year 2016 to restore child care subsidies; state General Funds of $420,000 in fiscal year 2015 and $850,000 in 2016 to add 15 new social worker positions at the state level.
The other two spending plans that we approved before the veto recess are the 2014-2016 budgets for the Judicial and Legislative branches, which the Kentucky General Assembly is also required to fund. We did so by approving an approximately $840 million Judicial Branch budget (found in HB 238) and around $117 million in spending for the Legislative Branch budget, found in HB 253.
Now, let’s talk a moment about the revenue bill — HB 445 — that will provide some new dollars to fund a portion of the state’s needs over the biennium. (That bill also received final passage on Monday and is now before the governor for his signature.) Lawmakers placed various funding mechanisms in the bill including, but not limited to, allowing abandoned savings bonds to fall to the state Treasury and the creation of a 1.5 percent pari-mutuel tax on instant horse racing. Other provisions include, but aren’t limited to: a phased-in barrel tax credit for distilled spirits, an angel investor tax credit, an expanded historic preservation tax credit, and “new markets” tax credit to help underserved areas of Kentucky.
Much has been done but there is much left to do. We have literally dozens of bills to try to move through the process in the session’s final moments in mid-April. For now, the governor has 10 days to veto any bills or parts of bills, and our last two days will be for possible veto overrides.
Please stay informed of all legislative action of interest to you this session by logging onto the Kentucky Legislature Home Page at www.lrc.ky.gov or by calling the toll-free Bill Status Line at 866-840-2835.
For committee meeting schedules, please call the toll-free Meeting Information Line at 800-633-9650. To comment on a bill, please call the General Assembly’s toll-free Legislative Message Line at 800-372-7181. You can also email me at Rick.Nelson@lrc.ky.gov.