No reason for districts to expect relief from SEEK shortfall

This from Brad Hughes at KSBA:

Education Commissioner Terry Holliday has asked the Beshear administration to step up and address the impact of this year’s projected SEEK funding shortfall. Initially, at least, the response is less than promising.

In the March 13 Fast Five on Friday email to state and local school leaders, Holliday released his Feb. 12 letter Mary Lassiter, secretary of Gov. Steve Beshear’s executive cabinet, requesting an additional $8 million to cover the shortfall “ to alleviate the financial burden that this shortfall will place on our school districts.”

“This shortfall is not a budget reduction, but represents the amount by which actual SEEK formula-generated needs for school districts exceeded the appropriated amount for FY 2015. The full amount of funding appropriated by the General Assembly will still be distributed to school districts, but is inadequate,” Holiday wrote.

“Based on information in the Quarterly Economic and Revenue Report for the second quarter, it appears the state General Fund revenues are improving and could end the year with a surplus. Accordingly, an opportunity may be available to alleviate this shortfall. Therefore in my capacity of Commissioner of Education, I respectfully request that the SEEK appropriation be increased to cover the SEEK shortfall for 2015,” the commissioner wrote.

On March 9 response, State Budget Director Jane Driskell responded to Holliday, acknowledging the request but calling it “premature.”

“Funding for the SEEK formula continues to be the Governor’s highest priority as evidenced by the commitment in the Governor’s budget for this biennium,” Driskell wrote. “However, for the first time the financing of Necessary Government Expenses (NGE) which have averaged $44 million over the past three years, is entirely from the Budget Reserve Trust Fund. As you know, NGE includes expenditures such as calling out the National Guard to assist with natural disasters, costs of fighting forest fires, and paying for more incarcerated felons than budgeted.

“It is our current expectation that this fiscal year NGE requirements will be at least as much as recent years. So preserving the health of the Budget Reserve Trust Fund is another issue to which we must pay close attention,” the budget director said.

“Therefore, your request is premature at this time. We will continue to closely review the Commonwealth’s budget situation as we move closer to the end of the fiscal year, to determine what options, if any, we may have.”

At the December meeting of the Kentucky Association of School Superintendents, Holliday first announced his agency’s expectations of a SEEK shortfall. At the time, he cited three factors that caused the shortfall:

• Lower than projected property assessments
• A higher than projected Prior Year End-of-Year Adjusted Average Daily Attendance
• Higher than projected Exceptional Child counts in categories of low and moderate incidence

“Although the total SEEK appropriation remains unchanged, districts should anticipate an approximate reduction (of less than 1 percent) in their district SEEK allocations for this year, which will be reflected in the payments for the final quarter (April, May, June),” Holliday said at that time.

“Per statute, a shortfall means that there will be no funds available for a January growth adjustment or for adjusted assessments.”