A quick review of Statehouse news:
KASB will be one of the opponents of SCR 1608, which amends the state constitution regarding suitable education finance, in Senate Judiciary Committee hearings at 10:30 this morning. Yesterday, the proponents were Sen. Steve Abrams, R-Arkansas City, and Dave Trabert, Kansas Policy Institute. The committee also received a briefing from the National Conference of State Legislatures, and a report on efforts to amend the New Hampshire constitution.
The House Education Committee receives a briefing today on common core academic standards. Yesterday, the committee held a hearing on HB 2261, which makes flexibility in transfers from certain school district funds that have been authorized over the past two years permanent. The committee also voted to recommend HB 2221, which requires districts to provide equal access to mailboxes and school activities for competing teachers organizations.
The Senate Education Committee will consider action on bills previously heard. This could include SB 103, changing the calculation of at-risk weighting, SB 104, requiring certain policies for internet access in schools, and SB 44, requiring districts to provide additional services to students with dyslexia.
The House Education Budget Committee yesterday approved the K-12 budget essentially as recommended by the Governor, with two exceptions. It added funding for a position to assist schools with e-rate applications; and voted to remove a provision that would require a "means test" for free participation in the Parents as Teachers program. The budget recommendations will go to the House Appropriations Committee Monday morning. That committee has been sifting through all budgets to find reductions in state spending.
That committee held a hearing yesterday on HB 2215, which would move the threshold for transporting certain non-residents students back to 10 miles, after the Legislature dropped the mark to 2.5 miles last session. Today, the committee holds a hearing on HB 2003, which requires districts to adopt a local option budget of at least 10%, which would then be considered as part of funding base state aid per pupil. This proposal, offered over the past two years, was developed to help the state defend itself in school finance litigation.
The second day of the KASB Governmental Relations Seminar concludes today at noon.
Thursday, 14 February 2013
Tuesday, 12 February 2013
Governor’s Tax Plan to Senate; New Bills; Hearings Continue
KASB supports the immediate revenue generators in the bill to help maintain school funding in FY 2014 and 2015. However, the additional tax reductions are projected to create a new budget shortfall by 2018 unless the state economy grows significantly more than average over the next four years.
New Bill Introductions
With the deadline for bill introductions by individuals and most committees this week, new proposals continue to pop up. Here is a quick review of bills introduced Friday and Monday. Some bills will require deeper study to determine the actual impact.
HB 2271 – appears to move school board and other local elections to November of even-numbered years (the same time as state and federal elections), and make local elections partisan. Other bills would move the elections to November of odd-numbered years.
HB 2266 – appears to move school board elections under the state, rather than local, campaign finance act, and require more reporting of expenditures to influence question submitted elections such as school district bond issues.
HB 2282 – sets up on incentive program for personal financial literacy instruction in schools.
HB 2285 – amends or clarifies the statutory definition of machinery and equipment; could have a major impact on local property tax base.
HB 2289 – prohibits implementation of the common core academic standards.
HB 2290 – requires school districts to hold an election and gain voter approval before joining in school finance litigation.
SB 169 – the Governor’s “Read to Succeed” program, prohibits a student from being promoted to fourth grade if not reading at proficiency on third grade state assessments or an alternative assessment approved by the State Board of Education; also provides funding for certain literacy assistance programs.
Also today:
Hearing in the House Education Committee on HB 2222, which includes staff members in certain requirements of school district bullying policies.
Hearing in the Senate Education Committee on SB 103, which changes the calculation of at-risk funding.
Hearing on K-12 state aid programs in the House Education Budget Committee.
Hearings tomorrow:
Hearing on K-12 state programs begin in the Senate Ways
Hearing in the Senate Judiciary Committee for proponents on SCR 1608, amending article six of the state constitution regarding suitable educational finance; with opponents on Thursday.
Hearing in the Senate Education Committee on SB 104, Children’s Internet Protection Act.
Hearing in the House Education Committee on HB 2261, allow permanent flexibility for transfers for certain school district fund balances and removing limits on district contingency funds.
Hearing in the House Education Budget Committee on HB 2215, restoring the threshold for certain non-resident student transportation authority from 2.5 miles to 10 miles.
KASB Statement on Funding for At-Risk Programs
On Tuesday afternoon, the Senate Committee on Education is scheduled to hear testimony on SB 103 – Definition of At-Risk Pupil. The bill would change the way school districts receive funding for at-risk student programs. Currently, funding is based on the number of students in the district eligible for free meals. The districts use those funds to provide services to students who demonstrate a need for additional help, regardless of whether or not they quality for free lunch.
SB 103 would change the criteria for students in grades four and above to the number of students who score below proficient on state reading and math tests.
The following is KASB's prepared testimony on the bill:
Thank you for the opportunity to testify on SB 103. This past December, the Delegate Assembly of the Kansas Association of School Boards overwhelmingly adopted plan called “First in Education, the Kansas Way,” with the goal of making Kansas the top state the nation for college and career-ready students. One of the specific priorities in that plan is to maintain the current system of using free lunch as the primary factor in determining the level of funding for services to at-risk students. We also believe other factors should be used to supplement this factor, which means we support the current non-proficient weighting. We believe that maintaining the “Kansas Way” of serving at-risk students is one of the keys to moving Kansas from number seven to number one in achievement. Therefore, we oppose SB 103. Please consider the following reasons why.
Use of free lunch eligibility is an appropriate indicator of at-risk students
There is overwhelming evidence that economic disadvantage is negatively correlated with academic achievement. Low income students (usually measured by free and reduced price meal eligibility) have lower test scores and graduation rates than their middle and higher income peers. This is true on state assessments for public school students; on state assessments for participating private schools in Kansas, on the National Assessment of Education Progress for states and private schools, and other state and nation reports for educational attainment, such as graduation and drop-out rates.
There are numerous reasons for this fact, but perhaps the most important is that education levels are strongly associated with income. Low income students are more likely to have parents with relatively less education, which means they are less able to provide academic help at home and less able to provide a stable environment that meets basic needs. There are, of course, many examples of low income students who thrive academically and higher income students who struggle. The current at-risk weighting system uses the number of free lunch students to determine the amount of money a district receives to provide at-risk services. The district then determines which actual students will receive services, and at what level.
The current system is working effectively meet the needs of at-risk students.
Because the school system cannot compensate for all of the factors that negatively influence a child’s academic performance, an achievement gap for low income students will probably always exist to some degree. Fortunately, schools under our current system have made progress in helping these students succeed. State assessment data shows that Kansas has begun to narrow the gap between low-income students and their peers, despite a significant increase in the percentage of Kansas students qualifying for free lunch.
In additional, Kansas is one of the highest achieving states in the nation, despite a higher percentage of low income students than 29 other states, and spending less per pupil than 26 other states. Kansas ranks especially high in performance of low income students. On the 2011 National Assessment of Education Progress, only six states had higher average fourth and eighth grade reading and math scores than Kansas, and all six spent more pupil than Kansas and had much higher percentages of low income students to serve with those dollars.
| State | Percent of Low Income Students At Basic or Above (2011) | Percent of Low Income Students at Proficient or Above (2011) | Current Spending Per Pupil, 2010 | Percent of Students Eligible for Free or Reduced Lunch |
| Massachusetts | 72.8% | 28.7% | $14,350 | 32.9% |
| New Hampshire | 70.4% | 28.6% | $12,383 | 23.5% |
| Vermont | 70.5% | 28.6% | $15,274 | 34.6% |
| Montana | 72.1% | 28.7% | $10,497 | 40.0% |
| North Dakota | 70.9% | 24.8% | $10,991 | 33.8% |
| Wyoming | 71.3% | 26.8% | $15,169 | 35.2% |
| Kansas | 69.8% | 25.5% | $9,715 | 45.7% |
In fact, as we have previously presented to the committee, Kansas ranks seventh overall on four separate measures of educational attainment. The highest achieving state with a higher percentage of free lunch students than Kansas is Illinois, which ranks 18thin achievement and spends almost $2,000 more per pupil than Kansas. No other state with as many lower income students does as well as Kansas, especially for the amount of resources provided. Quite simply, the Kansas system is working effectively and should not be changed unless there is clearly a better system.
SB 103 would create serious problems for the state, school districts and students.
Because SB 103 would shift the basis of at-risk funding at grade four and above from free lunch eligibility to students who are not proficient on state reading and math tests, those districts which have had the most success with low income students would lose the most money. Last year, it was estimated that this concept would reduce at-risk funding by over $100 million.
That reduction would not occur generally across the school system, but would be taken from at-risk programs which are required to be targeted to at-risk students, regardless of whether the students are low income or not. In other words, this bill would reduce funding for all at-risk students.
Because this bill would significantly reduce funding for programs specifically designed to help students reach proficiency, we believe the most likely outcome would be more students failing to reach proficiency. In that case, the Governor and Legislature would have to increase at-risk funding, quite possibly back to the same levels as before. Unless the legislature has set aside the “savings” initially achieved by this bill, new money for at-risk funding would have to come from cuts to other education programs, such as base state aid, other areas of state spending, or tax increases.
Students are often at-risk because of long-term individual, family or social problems. These problems cannot be fixed with one-time intervention. The current system gives districts a relatively stable source of revenue to help at-risk students before they take state assessments, and continue to provide support to maintain proficiency. Under this bill, districts would not receive funding for most students until after they fail the test, and would lose funding once the student passes the test – at least until they next time they fail, when they would again have qualify for funding.
Finally, remember it is the students who will bear the real impact of this bill: larger classes, loss of special services and less additional time for learning. We urge the committee to maintain support for a program that is working.
KASB Statement on Restricting School Board Lobbying
The following statement was presented to the committee by James Adams, Vice President, USD 345 Seaman Board of Education, on behalf of KASB:
Mr. Chairman, Members of the Committee:
Thank you for the opportunity to testify on SB 109 on behalf of the Kansas Association of School Boards. KASB opposes this bill because we believe it would impede the ability of public officials elected at the local level to communicate about matters of public concern to public officials elected at the state level. We believe this would harm the effectiveness of both local and state government. We further believe this bill is unclear as to its actual intent and impact. Please consider the following:
KASB’s members are locally elected boards of education, established in the state constitution to “maintain, develop and operate” public schools. In other words, they are constitutional bodies elected by the people, just like the Legislature and statewide executive officials.
Just like the Legislature, Governor, and other state agencies, school boards are affected by actions of other levels and agencies of government, and therefore must interact and cooperate with other levels of government and public bodies. That requires both providing information and expressing opinions about the advantages and disadvantages of governmental action. That is what lobbying is.
Just like the Legislature, the Governor and other state agencies, school boards develop positions on potential government actions, based on how those actions would affect the duties of the school board, the operation of the school district, and the interests of their constituents.
Just like state agencies, school boards form associations to more effectively develop and share those positions. KASB and other municipal associations work with our members just as the National Conference of State Legislatures, the National Governor’s Association and similar groups represent state entities at the federal level.
Some members of the public may disagree with the actions or positions of their local governments, just as they may disagree with actions and positions of state officials. In both cases, the voters may remove public officials through elections. School board members must face the voters every four years, just like Senators and statewide elected officials.
Limiting the ability of local officials to lobby, (in other words, express positions) at the state level means other groups can seek to influence the operations and costs of local government, but elected officials cannot respond in the same fashion.
SB 109 does create exemptions from the prohibition on lobbying, but only (1) upon request of individual Legislators, or (2) communicating through “proper channels” requests for action “deemed necessary for the efficient conduct of the public business or actually made in the proper performance of their official duties.” None of these terms are defined. We believe everything we do under the concept of lobbying falls under these exceptions.
Today, we are testifying before a committee, under the procedures set up by the committee, to communicate a request for action (to not pass this bill), because we believe passage of this legislation would impede efficient conduct of public business. We have communicated this to our members, and encouraged them to share their concerns with their elected representatives.
Would our actions today be permitted under this bill, or would I have committed a class C misdemeanor? How do we know? Who will decide?
We respectfully ask you to continue to allow the voters to decide if local elected officials are appropriately using public funds to communicate legislative concerns and positions to the state.
Thursday, 7 February 2013
Tax Hearing, Next Week's Bills in Committee
Tough Response to Governor’s Tax Bill
The Governor’s tax plan, HB 2110, drew questions ranging from skeptical to hostile in the House Taxation Committee Wednesday afternoon. The bill would maintain the state sales tax at the current level and remove two large income tax deductions to avoid deep spending cuts next year, and then implement further income tax rate cuts over the next five years.
Several committee members criticized it as a massive tax increase, despite Secretary of Revenue Nick Jordan’s assessment that all taxpayers will receive a net reduction in taxes due to the $800 million income tax cut passed last session. The hearing continues this afternoon, with KASB appearing as a proponent of the additional revenue to avoid further cuts in education funding.
Without additional revenue, the Legislative Research Department estimates the state will have to spend over $500 million in cash balances and cut about $250 million in state general fund spending to avoid a deficit next year, Fiscal Year 2014, with further reductions likely in FY 2015. The Kansas Policy Institute, appearing as neutral on the bill, supported a one-time cut of about 8% in state spending to balance the state budget.
Bill Hearings Next Week
At-Risk Funding. The Senate Education Committee holds a hearing next Thursday on SB 103, which would shift calculating the at-risk weighting districts receive from students eligible for free meals to students scoring below proficient on state reading and math tests in grades four and above. Students in grades K-3 would continue to use the free lunch method. Estimates last year indicated this method would reduce at-risk funding by over $100 million. The deepest cuts would come in districts with the highest number of free lunch students. The Legislature could either use that savings to increase base state aid or other education funding; or reduce spending on education.
KASB policies support the current system. The proposed change would reduce funding for at-risk programs that have helped move significantly more students to proficiency. Removing that support could cause more students to score below proficient, which would increase the need for funding. Also, the State Board of Education is expected to change its assessment program, so the state does not know how many students will be scoring
non-proficient in the future.
Suitable Funding. The Senate Judiciary Committee holds hearings on SCR 1608, a proposed constitutional amendment, with proponents and neutral on Wednesday and opponents Thursday. The measure would add the following sentence to the education article: “The financing of the educational interests of the state is exclusively a legislative power under article 2 of the constitution of the state of Kansas
KASB opposes amending the provisions of the constitution requiring the Legislature to make suitable provision for financing the educational interests of the state.
Non-resident Transportation. The House Education Budget Committee holds a hearing Wednesday on HB 2215, which would reverse last year’s change in law allowing districts to enter others district to transport students in certain cases. The threshold for transporting non-residents was dropped to 2.5 miles from home to school, effective in the current school year. The bill would restore it to 10 miles.
KASB supports the bill, under policies that support the 10 mile threshold.
Budget Hearings. The House Education Budget Committee and the Senate Ways
KASB supports the funding recommendations of the Governor, plus additional specific funding for finance equity, covering increased educational costs and targeted programs for improving teaching and learning.
Teacher Equal Access. The House Education Committee holds a hearing Monday on HB 2221, which would require that boards provide equal access to employee mailboxes and orientation programs for all “professional employees organizations,” i.e. teachers’ association; and not use the name of any professional organization in naming a day or break in the school calendar. KASB staff is reviewing the bill.
More to Come. Several committees have scheduled meeting next week without announced agendas, so the number of hearings is expect to grow. Next Friday, Feb. 15, is the final day for non-exempt committees to introduce bills. Two weeks after that, March 1, is the final day for non-exempt bills to be considered by the house of origin – essentially, the half-way point of the session.
Wednesday, 6 February 2013
Mid-Week Update on Legislation
Governor’s Tax Bill. The Senate Assessment and Taxation Committee finished hearings but took no action Wednesday on SB 78, which maintains the current state sales tax rate and repeals the mortgage interest and property tax deductions from state income tax; and also enacts a new set of income tax rate cuts. The bill is designed to first raise revenue to cover a projected shortfall in the state general fund and avoid cuts in K-12 education and other programs; but to continue a multi-year elimination of state income taxes. Hearings begin today on the same proposals in HB 2110 in the House Taxation Committee. KASB will testify as a proponent of the proposals to raise revenue immediately, but not further income tax reductions that could lead future cuts in education funding.
Property Tax Vote. Yesterday, the House Tax Committee voted to recommend HB 2047 without amendment. The bill would require school boards and other local governments to take a separate vote before budgeting and spending more property tax revenue than the previous year if raised due to growth in valuation. The vote must be published in the county newspaper. The bill is not designed to limit what can be spent. KASB testified against the bill because school funding is already covered by various state limits and required public votes and notifications, and the publication requirement would add cost. However, KASB indicated the bill would likely have little practical effect because boards already vote annually on district budgets.
Limits on Lobbying. KASB will testify today in the Senate Ethics, Elections and Local Government Committee as an opponent of SB 45, which would prohibit the use of state appropriations for certain lobbying and public campaign activities. KASB will explain the bill is unclear on its actual intent, but argue school boards should have the ability to represent the concerns of their constituents in the political process.
Statewide Mill Levy. KASB will testify today a proponent of SB 23 in the Senate Education Committee, which extends the statewide 20 mill levy for school districts for two additional years. Without renewal, school district general funds would lose approximately $575 million.
Dyslexia Services. KASB will testify Thursday as an opponent of SB 44 in the Senate Education Committee. The bill would require districts to provide specific services to students upon a written statement of from a licensed physician, psychologist or psychiatrist stating that a child has been diagnosed with dyslexia, regardless of whether the child has been identified by the school. If the school does not provide certain services within six weeks, the district must pay for such instruction by a third party selected by the parents. KASB believes schools are already required to identify such students and opposes state requirements for students with disabilities that exceed federal requirements.
Military Student Count. The House Education Budget Committee holds a hearing Thursday on HB 2109, which extends the second count date for military families through the 2017-18 school year. Under current law, this provision expires at the end of the current school year.
Supplemental Appropriations for State Aid. The Senate Ways and Means Committee announced a hearing tomorrow on SB 76, making supplemental appropriations to the state budget. This includes $21.3 million in general state aid required to maintain the base budget per pupil at $3,838 for the current school year.
Next week's schedule of hearings and committee action will be available by tomorrow - as always, subject to change.
Monday, 4 February 2013
Taxes, School Finance and KASB Testimony
Hearings opened this week on Governor Sam Brownback’s revenue proposals in the Senate Assessment and Taxation Committee (SB 78) and continue Wednesday in the House Taxation Committee (HB 2110). KASB’s testimony as a proponent of the Governor’s plan generated considerable surprise, and some dismay from those who oppose the Governor’s plan, including his goal of eliminating state income taxes entirely. Democrat leaders also point to a new projection by the Kansas Legislative Research Department showing the Governor’s proposed additional income tax cuts would create an $800 million shortfall in 2018.
In this post, I explain what KASB’s said about the state tax and budgets situation and why, and what we will say in hearings in this week.
Kansas faces a serious budget shortfall under current law.
The official consensus revenue estimate released in November projects state revenues for next fiscal year, ending June 30, 2014, will be $705 million, or 11.4%, lower than revenues in the current year (FY 2013) for two major reasons: the scheduled drop in the state sales tax rate from 6.3% to 5.7% and the full impact of last session’s reduction of income tax rates. Legislative Research estimates that with adjustments for mandatory spending, the Legislature will have to cut spending or raise revenue equal to $267.3 million to avoid a state general fund deficit at the end of FY 2014. However, that assumes spending down the entire FY 2013 ending balance of $505 million. Because those one time balances would not available the following year, at least several hundred million in additional spending cuts or revenue increases would be required in FY 2015.
Under state law, the Governor is required to submit a budget with a 7.5% ending balance and no tax increase. Governor Brownback’s “statutory” budget for FY 2014 meets this obligation by proposing an 8.3% across-the-board cut for all agencies. The Department of Education would lose $247.9 million; equal to a $365 cut in the base budget per pupil, or about 6.2% of school districts operating budgets (general fund, local option budgets and special education). The Governor's "real" budget avoids this by using over $100 million in state highway funds to pay for school district transportation aid, by keeping the sales tax in place and removing deductions, and other budget steps.
School operating budgets have already absorbed significant cuts.
School district general fund budgets are $190 million, or 6.8%, below the high level of funding 2009. (Each district’s general fund is determined by multiplying weighted enrollment by the base budget per pupil, and funded by the 20 mill statewide property tax, other local effort revenues, and general state aid.) School districts have partially offset those reductions by raising Local Option Budgets over $95 million. Special education state aid is largely unchanged since 2009, due to federal maintenance of effort requirements. As a result, school district operating budgets (general fund, LOB and special ed aid combined) are 2.3% below 2009.
Several important facts should be noted. First, statewide enrollment has increased by almost 2% since 2009, and total weighted enrollment is up 6.8%, mainly due to more students qualifying for free lunch and counting for at-risk weighting. Second, the consumer price index increased nearly 9.3% since 2009, so the “effective” cut in funding per pupil has been much larger than the dollar amount alone. Third, because there has been no increase in LOB state aid since 2009, additional LOB funding has been entirely financed by higher property taxes. Fourth, many districts have been unable to raise more LOB funding because they are at or near the state limit.
Although district budgets and state aid for general education operations have been reduced, other areas have increased. Since 2009, state aid for bond and interest payments have increased $35 million (although $22 million in capital outlay aid was eliminated), and KPERS contributions for school district employees $86 million. When additional local revenues for bond payments, capital outlay, food services, student fees and federal programs are included, total school district spending is higher than FY 2009. However, none of these funds are available for general education programs.
School funding has declined compared to Kansas incomes.
Kansas Personal Income, which is the total income of all residents and a measure of ability to support public services, increased from $108 billion in 2009 to an estimated $125 billion this year. State aid to school districts dropped from 3.0% to 2.6% of state personal income – the lowest level since the state took over a larger share of school funding in the early 1990’s. School operating budgets (general fund, LOB and special education aid) dropped from 4% to 3.5% - the lowest level since at least the early 1970’s. Total school spending dropped from 5.2% of total personal income to 4.6%.
It should be noted that while Kansas ranked 7th nationally in four major areas of achievement, the state ranked just 27th in current spending per pupil in 2010 (the last year national data in available and before several years of funding cuts). No state had higher achievement than Kansas and spent less per pupil.
Faced with these facts, KASB’s testimony was simple: we support tax changes to avoid further reductions in K-12 funding, and to provide additional funding for the increased costs of educational improvement, equity in funding for all districts, and targeted aid for key programs.
The Governor has really made two revenue proposals.
In his budget message, the Governor proposed keeping the state sales tax rate at 6.3%, rather than dropping to 5.7% on July 1 under current law (raising $262.3 million), and eliminating the mortgage interest deduction ($162.5 million). Combined with other actions, this produces a two-year budget that maintains a 7.5% ending balance; funds the base budget per pupil, local option budget and special education state aid at current levels; and increases funding for bond and interest and KPERS contributions based on current law. While far below the level KASB supports (and the level ordered by the three-judge panel in the Gannon school finance case), simply maintaining current funding requires a significant increase in state revenues. KASB supported these or alternative measures achieve that goal.
The Governor’s second revenue proposal, which is also contained in SB 78 and HB 2110, was not part of his budget message. It would remove the state income tax deduction for real estate taxes in 2014, and then begin further income tax cuts by lower rates in 2014, 2016 and 2017. It would also require that in any year state general fund revenues grow more than four percent, the excess will be used for further income tax rate reductions.
KASB did not support these provisions. A Legislative Research Department estimate made available Friday projects the cost of these addition tax cuts will increase from $73.6 million in FY 2015 to $126.3 million in FY 2016, $451.1 million in FY 2017 and $943.7 million in FY 2018. This would reduce state ending balances from 8.0% in FY 2014 to 6.8% in FY 2015, 5.5% in FY 2016, 0.4% in FY 2017; and require $781.5 million in spending cuts or revenue adjustments in FY 2018 to have a zero (non-negative) ending balance.
Democratic leaders have decried this as creating a self-imposed fiscal cliff or future crisis for the state. Some Republicans responded this estimate assumes “normal” economic growth that increases income tax receipts by 4% and sales tax receipts by 3.75% per year. If the income tax cuts stimulate higher economic growth, state revenues will also be higher. However, no estimate has been released indicating how fast the state economy will have to grow to cut taxes at these rates, maintain an ending balance, and provide up to a 4% increase in general fund revenues to support state programs.
KASB was the only proponent for revenue increases to finance the budget.
Other conferees supported the additional tax cuts but were neutral of opposed the revenue increases; while several groups opposed the bill because of further income tax cuts. That creates a difficult political dilemma. Democrats and some of the remaining moderate Republicans – the coalition that passed the three year sales tax increase under Governor Parkinson – say they will oppose keeping the sales tax at current levels for two reasons. First, they promised it would be temporary; second, they say it should not be retained to pay for income tax cuts that mainly benefit upper income taxpayers. Some have already criticized the Governor’s plan to end the mortgage interest and property tax deductions as tax increases on homeowners – although the Department of Revenue says all income tax payers will still see a reduction in income tax paid even without these deductions. In fact, as KASB noted, even with the Governor’s tax proposals in FY 2014 and 2015, state tax receipts will be lower compared to Kansas personal income than any year since 1993 when the state assumed more K-12 education funding and reduced school property taxes.
On other hand, powerful organizations like the state Chamber of Commerce and the Kansas Policy Institute also have come out against the Governor’s plans to raise more revenue. They say state spending should be cut more before any additional revenue is raised, and want to accelerate the reduction in the state income tax to zero. The Governor included further income tax cuts in his tax bills to make it politically easier to sell the revenue generators. However, it is possible the bills could pass with the tax cuts intact and the revenue increases stripped out – which is exactly what happened last session to create the current budget problem.
How would additional funding cuts affect K-12 education?
In its testimony on SB 78, the Kansas Policy Institute provided a table showing six states that have lower state spending per resident than Kansas: Texas, Florida, Missouri, Oklahoma, New Hampshire, and Nevada. Only Missouri and Oklahoma among those states have a state income tax. KPI argues that Kansas can cuts state spending and still have the “same basket of essential services.”
However, the data for these states only looks at state spending. Education funding is a combination of state, local and a relatively small amount of federal funding. Kansas provides 52.5% of K-12 funding from the state. Among the comparison group, only Nevada is higher (55%). Oklahoma’s state share is 46%; all the others are less than 40%. Therefore it is not surprising that while Kansas provides about $1,700 more per pupil in state funding, the other states spend on average $1,000 more than Kansas from local sources, which is Kansas would be likely be property taxes.
Although Kansas schools receive about $841 more pupil more than the average of these states, it is not because Kansas is a higher spender. Kansas ranks 26th in total revenues per pupil and 27th in current spending per pupil (which excludes capital cost and debt service). These low-spending comparison states are also among the lowest spending on education, except for New Hampshire, which ranks 14th in total per pupil revenue. Texas ranks 36th, Missouri 38th, Nevada 43rd, Florida 44th and Oklahoma 48th. (All financial data is for 2010, from the U.S. Census Bureau.)
Low spending states are NOT getting the same educational results.
Higher spending states tend have by far the better outcomes, and the KPI comparison group makes this point. New Hampshire, the state with the highest per pupil spending in the group, ranks 2nd nationally on National Assessment of Education Progress scores, 4th in high school completion, and 7th in both preparation for college and adult educational attainment. Kansas, the next highest spending state in the group, ranks 9th, 11th, 9th and 13th on achievement measures – higher than any other states comparision states. With just a few exceptions, the other four states all rank in the bottom half nationally on education measures – often in the bottom 10.
Educational achievement is critical to economic success.
Kansas may have had a “lost decade” of population and job growth, but it has the second-highest per capita income in the comparison group ($39,494 in 2010), and its national ranking moved up from 27th in 2000 to 21st in 2010. Only New Hampshire had higher per capital income, and it slipped from 6th to 9th over the decade. The two states with the highest educational achievement had the highest per capita income – which no surprise considering that higher education levels lead to higher income and employment. The other five states had both lower educational attainment and lower per capita income than Kansas. Texas and Oklahoma also improved their ranking from 27nd to 23rd and 42nd to 33rd, respectively. Florida and Nevada both dropped in the national ranking despite having no income tax, from 21st to 24th and 14th to 31st. Missouri was almost unchanged, moving from 31st to 32nd.
This sample of states illustrates KASB concerns about the Governor’s revenue bills. Additional cuts in state spending are likely to result in higher local funding (property taxes) or lower educational funding per pupil – or both. States spending less than Kansas have lower educational outcomes. Lower educational outcomes will, in the long run, reduce personal income.
Therefore, KASB support a tax plan that supports improving educational outcomes by providing a growing base of state funding and avoid further cuts in school budgets. We need additional revenue now, and should not adopt further tax cuts until school funding is stabilized and able to meet the cost of improved outcomes.
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