Commish: Dear Governor Beshear

January 14, 2008

Governor Steven L. Beshear
700 Capital Avenue
Suite 100
Frankfort, KY 40601

Dear Governor Beshear:

Thank you for providing an opportunity for this agency to add to your understanding of the effects of potential budget cuts.

There are three main areas of concern as a result of possible budget cuts: the effects on the Kentucky Department of Education’s ability to provide services to the state’s public school system; the potential impact on students and teachers if cuts are made in programmatic areas; and the impact on the already inadequate Support Education Excellence in Kentucky (SEEK) fund if it is not held harmless.

This agency has submitted a proposal to the Governors Office of Policy and Management (GOPM) for a three percent reduction to the fiscal year 2008 operating budget, which totals nearly $57 million (including excess SEEK monies). The proposal is designed to cause the least amount of negative effect on student learning and crucial KDE programs/operations. The elements of the proposal for a three percent reduction are:

General Fund reduction in the total amount of $11,554,700 from the following two areas:
Teacher Professional Growth Fund ($10,181,300)
Read to Achieve ($1,373,400)

$294,900 Restricted Fund reduction from various agency receipt accounts

$1 million Emergency School Loan account (The last loan from this account was made in 1992 and was paid in full in 2001. There has been no activity since that time.)

On top of those cuts, $43,800,000 of excess SEEK funds will be absorbed back into the state General Fund.

Since 2001, the Kentucky Department of Education has lost 219 positions. Our agency appropriations have gone from $31.7 million in fiscal year 2002 to $24.3 million in fiscal year 2007. These additional cuts will have a direct, negative impact on staff’s abilities to implement mandated programs and provide services to school districts.

On Friday, the Kentucky Department of Education submitted recommendations for a possible 12 percent reduction in the General Fund for fiscal year 2009. While these recommendations do not include SEEK funds, they represent $46 million in cuts to four key areas: extended school services, professional

development, textbooks and safe schools. If these cuts are implemented, schools and districts will see immediate effects.

Textbook purchases will be put on hold. Districts are scheduled to purchase science textbooks beginning in July, and the next cycle of purchasing is for mathematics textbooks. If the cycles are delayed, districts that have funds set aside for math textbooks may not have the discretion to purchase those. If the cycles aren’t delayed, the reduction in funds will likely force districts to review their plans for purchasing.

Extended school services, which provide help for students who are falling behind, will be greatly curtailed.

Professional development for teachers, which is crucial to their abilities to raise student achievement, will be limited in scope and availability.

The cuts in safe schools monies will put innovative programs and activities on indefinite hiatus, effectively slowing or stopping those that provide students and school staff with safe learning environments.

The potential cuts to these programs will have a direct impact on Kentucky’s public school students, but another primary concern is to avoid any cuts to the Support Education Excellence in Kentucky (SEEK) funding formula. SEEK represents the bulk of public school funding, providing more monies than local and federal revenue combined.

SEEK is an equity-based formula that treats school districts as unique entities, taking into account local revenues, student demographics and other variables. Although studies have indicated that the formula does provide equity, the formula’s funding has not kept up with inflation and the need to balance ever-rising costs of health insurance and other benefits.

Since SEEK comprises the bulk of school districts’ general funds, it is the source from which districts must draw in order to meet salary and program mandates, which continue to increase. Even if SEEK funding remains at constant levels, districts soon begin to fall behind mandated expenditures.

Automatic step increases will cost districts more, and the absence of an increase in SEEK will make it difficult for districts to cover the added expense. Step increases comprise from one to three percent of the total expenditure for certified salaries, so most districts will need to make some sort of cuts in order to fund them.

Many districts would receive less revenue through SEEK because increases in local property assessments will cause their local required effort to increase, thereby reducing the state contribution. This reduction would be greater in proportion to the percentage of property value increase, so the level of impact would vary across districts.

There would be an obvious shifting to the local level for more of the burden for funding public education. A lessening of state support will contribute to an erosion of the level of equalization among districts, particularly with the interplay of various tax laws with Tier I and Facilities Support Program of Kentucky (FSPK) equalization.

The SEEK allocation was based on the cost of providing two instructional days and required teacher raises, as mandated by the 2006 General Assembly. Since the entire amount was not distributed, this

became an underfunded mandate. In addition, the unexpected increase in the classified employee retirement contribution for school districts cost approximately $45 million.

When SEEK funds lapse, they are not distributed back to districts, but absorbed into the state General Fund. There are no windfalls as a result of excess SEEK funding.

Other expenses, such as utilities, insurance, supplies and fuel (the cost of diesel has risen as much as 400 percent in recent years) continue to rise. With more than half of a district’s revenue remaining constant or declining, services to students must be cut in order to fund these fixed costs of operation.

I asked school district superintendents to share the impact of any potential cuts to the SEEK funding formula, and a number of themes emerged.

Staffing in many districts already has been reduced; cuts to SEEK might require even further reductions in instructional positions, hindering efforts to improve student achievement on federal and state measures.

Less SEEK monies would place some districts very close to the two percent contingency requirement.

Many districts would eliminate full-day kindergarten.

Instructional staff for foreign language, art, music, physical education and other subjects would be eliminated in many districts.

The numbers of instructional assistants and curriculum specialists would be reduced.
Class sizes would be increased.

Allocations for school supplies, including high school textbooks, would be reduced.

School employee travel for professional development opportunities would be cut back.

Technology projects would be put on hold.

The consensus in the school community is that the impact of any cuts to SEEK would be devastating and extremely harmful to students. Superintendents say that any SEEK reduction would result in fewer staff, limited options for students and financial hardship throughout their districts.

Even if SEEK is held harmless, the recommendations we provided for the proposed 12 percent ($46 million) cut will directly affect Kentucky’s public school districts. School district officials have indicated their concerns about these cuts and any curtailing of services from this agency that could result from the three percent ($57 million, including excess SEEK funds) operational cut.

A report issued in November 2007 by the Prichard Committee indicated that the state’s after-inflation investment in public education has not matched its academic goals. Robert Sexton, executive director of the Prichard Committee, said, "Starting in 1992, state funding had no real growth beyond inflation and benefits costs for 12 years, and additional funding since 2004 has gone mainly to repair earlier damage."

Section 183 of the Kentucky Constitution mandates that the General Assembly, by appropriate legislation, provide for an efficient system of public schools throughout the state. Related court cases and Attorney General’s opinions indicate that the state must provide adequate funding for the public school system. While the definition of “adequate” may differ depending on circumstances, cuts to P-12 programs do not fit the generally accepted definition.

I encourage you to consider the full impact on the state’s public school system as you work to meet the demands of a tight budget. Kentucky has shown real progress over the past decade and a half, and strong, steady funding is the key to maintaining that progress.

Sincerely,


Jon E. Draud


SOURCE: KDE