The Richmond Register

January 21, 2014

Highlights from Beshear’s budget plan

By Ronnie Ellis
CNHI News Service

FRANKFORT — Gov. Steve Beshear’s budget proposal for the next two years will “harm a lot of services vital to Kentuckians” but will also “make investments in the future of Kentucky that will make a tremendous difference in the future.”

Those are the governor’s descriptions of a budget that proposes no new revenue from either tax reform or expanded gambling but nevertheless increases funding for the SEEK program, the basic funding system for public schools, by $188.9 million over two years.

That will be mostly all eaten up, however, by a 2-percent salary increase for teachers and classified personnel in the first year and a 1-percent increase in the second year. Beshear wants also to spend $47.7 million each year to restore funding for textbooks, teacher training, after-school services and safe schools.

But that “re-investment” comes with a cost elsewhere, including in higher education which will see a 2.5 percent cut. Beshear would soften that blow by authorizing the universities and community colleges to issue bonds they can pay off for capital projects and funding half the increased retirement costs for the regional universities, excluding the Universities of Kentucky and Louisville which don’t participate in the state pension system.

Here are some basic highlights:

ELEMENTARY/SECONDARY EDUCATION: the increase in SEEK raises per pupil guarantee for all districts to $3,911 in fiscal year 15 and $3,981 in FY 16. But it will take most of that for salary increases of 2 percent in year one and 1 percent in year two. It will expand eligibility for 4-year-olds for pre-school to 160 percent of the federal poverty line, allowing enrolment of an additional 5,125 more children in pre-school.

HIGHER EDUCATION: cuts operational funding 2.5 percent, continuing the decade long reversal of the percentage of college costs paid by the state and by students and parents. But it authorizes bonds for $60 million for the Bucks for Brains program, the first time that’s been funded since 2010.

But it also authorizes the universities to issue bonds paid off by their own revenue streams – agency bonds as they are called – and for the first time allows the Kentucky Community and Technical College system to do the same. The KCTCS bonds will pay 75 percent of construction costs while the individual institutions will raise 25 percent of it privately. The total bonding for all post-secondary institutions is $520.3 million.

STATE EMPLOYEE RAISES: Beshear wants to increase state workers’ pay for the first time since 2009, but he would do it on sliding scale of income. Employees making up to $27,000 a year would get a 5 percent raise in the first year; those making between $27,000 and $36,000 would get a 3 percent increase. Those two groups make up about half of all state employees, Beshear said.

Those making $36,001 to $50,000 would get a 2 percent increase and those making above $50,000 would get a 1 percent increase. All state employees would get a 1 percent increase in the second year.

Beshear also wants to increase funding for judicial branch salaries for about 800 deputy clerks and others whose salaries barely rise above the federal poverty line.

PENSIONS: The budget would fully fund the increase in the actuarially required contribution or ARC for the state employees’ retirement fund required by last year’s pension reform bill: an additional $101.3 million in first year and $106.1 million in the second. It will also fund the increased pension costs for mental health/mental retardation boards and for local health departments.

MEDICAID: Budget funds General Fund increases of $65.7 million in first year of biennium and $124.2 million in the second. This is not caused by Beshear’s expansion of Medicaid under the federal Affordable Care Act – those costs are fully funded by the federal government in both years. It does, however, include costs of what is called the “woodwork effect,” increased enrollments under the old guidelines by people previously eligible but who only learned of their eligibility because of publicity surrounding the ACA.

HUMAN SERVICES: The budget restores cuts to the Child Care Assistance Program which subsidizes day care costs for working poor parents. It does not restore similar cuts to the Kinship Care program which helps to place children removed from homes with parents rather than with foster parents.

EASTERN KENTUCKY: The budget will extend broadband services throughout the state with emphasis on the eastern part of the state. Single county coal severance taxes will fund $4 million for a regional development fund for eastern Kentucky, based on model in Minnesota Iron Range. In the road budget, Beshear would complete the four-laning of the Mountain Parkway over six years.

CUTS: Most agencies will see a 5 percent cut on top of cuts over the past six years. Cumulatively, those cuts amount to as much as a 41 percent reduction in some budgets for constitutional offices and important agencies. For instance; Environmental Protection has been cut 37 percent over that time; Juvenile Justice, 17 percent; universities 17 percent; and constitutional offices from 35 to 41 percent. Most of the constitutional offices’ costs are in personnel.

Beshear said that means some agencies could see layoffs or lose federal funds for lack of state matching money and the public may see service delays.

AREAS EXEMPTED FROM CUTS: Those include K-12 education; corrections, public health, prosecutors and public defenders; and debt service. The Kentucky State Police faces a 2.5 percent cut.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at Follow CNHI News Service stories on Twitter at