April 5, 2009

Last week, the House and Senate came to an agreement on the FY 2010 Mega Budget Bill, which was officially approved by both chambers this week.  I have a number of concerns about this budget, which is why I stood in opposition to the bill.

The $13 billion budget may not take full advantage of federal stimulus dollars to protect higher education, but it includes $58.3 more in spending than Governor Sebelius proposed.  We did this while cutting public education- which is one of our most important investments and something we have worked to protect all session.  Below are more specific descriptions of budget allocations and cuts.

It is important to remember that this budget has been created using a four-month-old financial forecast.  The next forecast will come on April 17, two weeks after the end of the regular session. If tax collections continue to fall as short of expectations as they did November through February, the mega budget approved this week will not balance, and legislators will be forced to revise it during the veto session in late April.  At that point, the mega bill will provide a blueprint which will be adjusted to create a balanced budget on Sine Die, the last official day of the legislative session.  Once the session adjourns in May, the Governor can make adjustments during the interim to prevent the state from operating in the red.

K12 Education
Although K12 education cuts are being portrayed as a mere .7 percent reduction, the actual cuts are more like 2.7 percent.  If we had continued with the K-12 financing plan, schools would have received a $4,492 budget per pupil for 2010 fiscal year, more than $180 million more than it will receive under this budget. 

The major problem with cutting education is that the cut was unnecessary.  There is currently $50 million available to Kansas by virtue of casino proposals in Wyandotte County and in South Central Kansas ($25 million each).  Had these monies been utilized in this budget, cuts to K12 education could have been avoided altogether.  Additionally, the $25 million cut approved in this bill will fall disproportionately on rural school districts that rely heavily on base state aid per pupil finding. 

Vulnerable Kansans
The Mega Budget bill has no money to fund developmental disability waivers.  When it left the House, there was $2.5 million in the bill which would draw down federal dollars (over $7 million) and reduce the waiting lists for services.

The bill provides only $4 million to fund physical disability waivers (drawing down over $9 million in federal dollars).  When the bill left the House, there was $8 Million in the bill which would draw down over $18 million in federal dollars and reduce waiting lists.

Earlier this year a freeze on services for waivers was instituted because of shortfalls in 2009 revenues.  Nursing home admissions jumped by 303 persons in January 2009 and it was clear how a freeze- in addition to the waiting list- is not a long term, cost saving measure to the people of Kansas.  Home and Community Based waiver programs could have served more than 600 persons for the cost of the 303 that went to nursing homes as result of the freeze on services.

State Employees
The bill provides a 1.0 percent base salary increase and longevity bonus payments for state employees; however, these salary increases would have to be self-funded by each of the agencies.  These increases are highly unlikely since agency budgets are being slashed 5-10 percent.

WCGME
Funding for the Wichita Center for Graduate Medical Education ($6.5 million) is to come from stimulus funding if available.  No source has been identified for this funding.

Corrections
Public safety was cut $17.6 million, or 6.4 percent.  The budget eliminates 500 beds in our prison system, closes drug and alcohol programs, discontinues day reporting programs, and shuts down community correction beds in Johnson and Sedgwick County.

Unnecessary Expenditures
This budget continues Kansas, Inc. and Kansas Technology Enterprise Corporation as separate state agencies, rather than merging them with the Department of Corrections. This action would have saved the state about $5 million annually.

In January, the Governor proposed folding KTEC into the Department of Commerce.  I strongly support this position.  In difficult budget years, there is no reason to fund different agencies to do overlapping, duplicate work.  In the Mega bill, KTEC remains a free standing state agency and will receive a budget of about $12.1 million for fiscal 2010.  Their budget was cut by 6.5 percent, to about $11.66 million. 

A 2006 audit showed that Tracy Taylor, president and chief executive officer of KTEC, has a base salary of $150,000 and was awarded a $60,000 bonus and a $52,000 payment for doing work for the Kansas Bioscience Authority and that KTEC paid its employees more than $550,000 in additional compensation from 2004 to 2006, including nearly $333,000 in annual bonuses and up to $224,000 in supplemental payments for work done for the Kansas Bioscience Authority.  Parts of the 2006 bonuses paid to three KTEC employees appear to have been contrary to State law because the bonuses were based on work done for a subsidiary of KTEC which is prohibited.  And the Mid-America Manufacturing Technology Center, a KTEC subsidiary, also paid about $437,500 in bonuses to its employees.  The salaries at KTEC and Kansas, Inc. are set by their board of directors, not by the state legislature.

Cities and Counties
Cities and counties will split up to $5 million in the Special City County Highway Fund, but they will receive no revenue sharing money from the state in the Local Ad Valorem Tax Reduction Fund.  The slider was passed in order to help local governments adapt to the loss of revenue when the legislature eliminated all tax on business machinery and equipment.  The big tax cut was phased in and the slider was provided so that local property taxes would not skyrocket in places where big industry would no longer pay taxes, like KCK and Wichita.  The 2010 slider payments will not be made as promised.

Children's Health Insurance
The conference committee agreed to add $1.2 million for expanding the state SCHIP HealthWave insurance for children whose families' income is 250% of poverty.  The funding comes from the Children's Initiative Fund which was created from the flow of tobacco settlement funds to the state.

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