Prichard Breaks Down the Bad News

SEEK and the Governor's Budget

This from Prichard:

The SEEK base guarantee per pupil will go down:

• $3,903 was the original SEEK base guarantee per pupil for 2011-12
• $3,850 is the average guarantee that has actually been possible for 2011-12: schools turned out have more students than the budget expected and funding for each child had to be reduced as a result.
• $3,833 is the proposed base guarantee for 2012-13.
• $3,827 is the proposed base guarantee for 2013-14.

The total funding for the SEEK base will be flat:

• $2.9 billion was the budget line item for 2011-12.
• $2.9 billion is the proposed budget line item for 2012-13.
• $2.9 billion is the proposed budget line item for 2013-14.

Why will the per pupil will go down while the total funding remains flat?  Primarily, because the number of students in average daily attendance is expected to rise...

Why Kentucky School Funding Is A Huge Concern

For This Year And The Future

This from the Prichard Blog:

Over at Prich, Susan has been putting some scale to the school funding shortfall. While in Frankfort there are no signs of hope.

For the past four years declines in state and local revenues for Kentucky schools were largely offset by federal dollars. That relief is now a thing of the past.

[W]e know that the trend for this year and beyond will be decline unless state leaders step up in the current legislative session. We also know those funding losses will pose a grave danger to Kentucky's bold commitment to ensure that all students graduate from high school with the knowledge and skills they need to succeed in higher education and in the job markets of the future...

[L]ooking to the current year and the future, we know our schools are now working with a federal decline and a state increase that is nowhere near enough to make up those losses. We also have reason to worry about local funding. The newest report on state revenue says that July to December state property tax collections in 2011 dropped more than 9% from the 2010 level. If local tax receipts show a similar trend, the results could be disastrous. It's too early to know that will happen, but definitely time to be very concerned that it might.

Stumbo: 'We are not going to cut education'

This from H-L, photo by David Perry:

House Speaker Greg Stumbo said Thursday that the Democratic-controlled House would not support the Senate's plan to make cuts to education, but left the door open for possible cuts to other parts of state government.

"We are not going to cut education," Stumbo said. "Not when there is a viable alternative. And there is a viable alternative."

Stumbo's comments came a day after the Republican-controlled Senate passed its version of House Bill 305. That version calls for cuts across state government, including cuts to higher education and K-12 education, to plug a hole in the Medicaid budget.

Now the Democratic-controlled House and the Republican-controlled Senate must hammer out an agreement in the waning days of the legislative session. House leaders said late Thursday that they expected negotiations on the budget to begin Friday and were hoping that an agreement could be reached either Friday or Monday...

Health and Retirement Growth as Share of State P-12 Spending Growth

This from Prich:

Although, in fairness, the budget could have been worse, it's still bad news for Kentucky education. One big reason; the huge and growing amount of money being eaten up by employee benefits vs. all other funding for education.

We asked our consultant Susan Weston to conduct a long-term review of those two funding areas, and this chart is the shocking result of her work.

As the graphic shows, inflation-adjusted spending on health insurance and retirement benefits for P-12 employees has grown by $620 million over the past 20 years. Spending for all other P-12 needs has grown by $22 million. That's 97 percent vs. 3 percent - making a clear case for the critical need to bring spending on benefits under control.

SOURCE: Prichard Committee Email

Holliday expects more bad fiscal news ahead for schools, but Read to Achieve funding still coming

Meets with Local School Board Member Advisory Council

This from Brad Hughes at KSBA:

Education Commissioner Terry Holliday knows education funding cuts could be on the horizon, but he wants to assure district leaders that money for one significant instructional program remains in place.

Addressing his Local School Board Member Advisory Council Friday in Frankfort, Holliday pointed to multiple uncertainties for school funding in the coming months.

“We’re expecting to hear next week from the governor our budget reductions in state agency funds for this year,” the commissioner said. “The governor is looking at $120 million to $130 million this year and $160 million next year.

“I’ve alerted all of your superintendents not to expect textbook money,” he said. “We’re down to $650,000 or about $1 a child. That will be our first place (to cut), because what can you do with a dollar a child?”

“We’ve always had a little cushion in SEEK. It was $45 million this year (but) I don’t think there’s going to be a cushion next year,” Holliday said.

“This budget is problematic at a time when we have less money, less resources and more bad news to come,” he said. “If anything next year, I’ll bet there’s going to be a shortfall in SEEK. So you are wise to hold onto your fund balances.”...

One issue Holliday hopes to clear up during that briefing is confusion over reimbursement for the Reach to Achieve literacy initiative utilized by many districts. Participating districts get 65 percent of eligible expenses reimbursed by the state, and must pick up the remaining 35 percent...

Ky. colleges likely to see up to 6% tuition increases

"Without a budget, we would need to close our campuses.
The likelihood of this impact is real and substantial."

-- Robert King

This from the Herald-Leader:

The Kentucky Council on Postsecondary Education on Friday approved guidelines for tuition hikes for 2010-11 of 6 percent for the University of Kentucky and University of Louisville, 5 percent for comprehensive universities and 4 percent for community and technical colleges. Last year's increase was staggered at 3 percent to 5 percent.

Some of the state's public university presidents and council members questioned why the in-state undergraduate tuition increases shouldn't be more than 6 percent. Even if each school adopts the maximum tuition increase allowed, all will be substantially in the red, according to the presidents.

And if the state doesn't adopt a budget soon, said council president Robert L. King, the universities will have to shut down temporarily. The common perception is that universities can run on tuition revenue in a budget pinch, but using tuition requires a budget appropriation, which requires that the state have a budget, King said.

After a 60-day legislative session that ended last week, Kentucky doesn't have a budget...

UK President Lee T. Todd Jr. told the council that he called Beshear on Thursday to tell Beshear he was going to ask for a 7 percent ceiling.

Even with a 6 percent increase, CPE figures show UK will have a deficit of nearly $7.6 million for operations. Eastern Kentucky University would have a deficit of $3.8 million with a 5 percent increase; Kentucky State University, $6.2 million after a 5 percent increase; and Morehead State University, $3.8 million after a 5 percent increase...

The College and Career Readiness Act of 2010?

Thanks to Susan Weston over at Prichard for doing what I didn't do this weekend.

Friday, the U.S. Department of Education announced its "Blueprint" for revising the Elementary and Secondary Education Act. I didn't read it for religious reasons. It's March and I'm in Kentucky.

Forced to choose between reading the Obama administration's plan for school reform through the reauthorization of NCLB - which has the potential to affect the lives of millions of American children forever - and watching UK and a bunch of bracketology which I enjoy, I chose badly. Heck of a game though, wasn't it?

In three parts this morning, Susan outlines the plan President Barack Obama and Education Secretary Arne Duncan hope will gain congressional consensus and become the "College and Career Readiness Act of 2010," or whatever they end up calling it.

In Replacing NCLB Part 1, Susan says that "College and career readiness by 2020" may soon replace proficiency by 2014" as the main goal of the federal P-12 education programs.

States will have will two options for reading and mathematics standards:

First, they can “upgrade their existing standards, working with their 4-year public university system to certify that mastery of the standards ensures that a student will not need to take remedial coursework upon admission to a postsecondary institution in the system.”

Second, they can adopt standards in common with other states.

Kentucky chose door # 2.

In Replacing NCLB Part 2, Susan reports on the $350 million part of the RTTT fund which Secretary Duncan held out for assessemnt.

The blueprint expects those assessments to allow reporting on students' growth from year to year, and it proposes federal grants to support improvements in assessment methods. Beyond that, though, it's hard to find details on what "high quality" will mean.

Everything I see suggests continued movement toward a value-added system.

And in Part 3, Susan finds that,

Accountability will be tougher on a few schools and easier under most if the U.S. Department of Education's approach to revising the Elementary and Secondary Education Act becomes law.For the five percent of schools with the weakest growth, states will be required to use one of four aggressive interventions:

• closure
• restart under outside management
• turnaround by replacing the principal and half the staff
• transformation that includes a new principal, strengthened staffing, a new instructional program, and other steps ...

At the opposite end of the spectrum, schools with the strongest student growth will receive some type of recognition and reward. The recognition could play a valuable role in spotlighting schools that "beat the poverty odds" and building public confidence that high goals really are in reach even for students who have often been allowed to underperform.

And as long as you're there, check our Prichard's take on the House budget proposal in $59 million in cuts to state support for current P-12 students.

Comparing the original budget for this fiscal year to the budget the House just approved for the 2012 fiscal year shows a reduction of roughly $59 million in planned state spending for current educational services. $103 million in reductions to specific programs is only partly offset by $44 million in increases to other efforts.

Susan's got the itemized list of cuts.

Balancing the Budget in Kentucky

On the left side of the scale:

Every House member up for election in November.

On the right side are such lightweight issues as:

Hundreds of millions in structural imbalances
Decreasing revenue due to outmoded tax structure

Ability to procrastinate by cobbling

together a budget for the first year
Dreams of more federal dollars
State Programs cut

State planning damaged
But Special Projects funded

Special Session in 2011...

after the election

Is that about right?

This from WAVE 3 TV:

Budget writers still working on plan

A leading House budget writer says nothing is safe from possible budget cuts as Kentucky lawmakers look to plug a massive shortfall for the state's next budget.

House Appropriations and Revenue Committee Chairman Rick Rand told reporters Tuesday that it appears there will be no new revenue to help balance the next two-year budget.

Rand said top House budget writers are still considering several options, but said lawmakers will consider everything when looking at possible budget cuts.

He listed funding for elementary and secondary public schools as the last place lawmakers would look in seeking budget cuts. He also downplayed tapping school contingency funds.

A slowdown in tax collections caused by the recession has led to a projected $1.5 billion shortfall over the next two-year budget cycle.

Besides, Stumbo might raid the fund

This from the Winchester Sun:

Schools face $1.5M deficit

Clark County Public Schools are already facing financial woes for the 2010-2011 school year.

A draft budget for the 2010-2011 year was presented to the school board at a special meeting Wednesday night. It includes a deficit of $1,553,677 and a contingency plan under the required 2 percent.

Consultant Dr. Bob Wagoner and Clark County Financial Director Stacey Clark presented the budget, and Wagoner encouraged the board to find a way to cut expenses by $800,000. Wagoner said that if the deficit is dealt with over two years rather than all at once, it would be easier for the district to handle.

"It is going to require some very difficult decisions by the board,” Wagoner said. “. … If it is not tackled, short of winning the Powerball, there’s not going to be a good way to do this without doing damage to your instructional program.”

Wagoner said that before the budget is approved, the contingency fund would have to be increased as well.

Although Wagoner said that having 5 to 8 percent in the fund is preferable, the current financial situation will not allow that....

And this from the Daily Independent:

Schools leery of one possible fix for budget

Proposal would take away districts’ rainy day funds

A proposal for the state to turn to school district rainy day funds as budget bandages has area administrators nervous.

The proposal is one of five possible fixes for Kentucky’s red-ink predicament and, if adopted, would fund deficits in the state’s education budget with money districts keep in reserve for emergencies.

“It concerns me because it’s not extra money. It’s money we hope not to have to use but it’s real money,” said Lawrence County School District Superintendent Mike Armstrong.

While worrisome, the proposal floated by House Speaker Greg Stumbo doesn’t come as a surprise, Armstrong said. Stumbo told superintendents at their recent convention that “anything and everything is on the table,” Armstrong said.

The proposal may not be legal because there is no way to determine how much of a contingency fund is state money and how much is local, said Greenup County School District Business Manager Scott Burchett. Burchett is worried, anyway, because the $780 million in gambling revenue Gov. Steve Beshear had been counting on in his
proposed budget faces certain death in the General Assembly.

That leaves a hole the state will have to fill somehow, Burchett said. “That makes us real nervous,” he said...

Stumbo Still Threatening School funds

House Speaker Greg Stumbo continues to rattle the chains toward school contingency funds.

The raiding of contingency funds would further undermine trust in the legislature while promotiong unsound fiscal practices in the schools - all brought to you by a group that understands unsound fiscal policy.

This from the Courier-Journal:

House could ask schools to spend their reserve funds

Not every district would be affected

Cutting funding that local school districts receive from the state and forcing them to spend money in their reserve funds is still an option to help balance the state budget for the next two years, House Speaker Greg Stumbo said Tuesday.

School districts have a total of about $800million in their reserve funds, although Stumbo said not every district's fund would be tapped.

“There's a significant amount of money there that could be (used) to balance the budget,” the Prestonsburg Democrat said. “I'm not saying we are going to do it, but it could be used to supplement the (school funding formula) in this one-time occurrence.” ...

And from H-L:

...Brad Hughes, spokesman for the Kentucky School Boards Association, predicted that any attempt to tap those reserve funds would draw strong opposition from school officials.

Even as lawmakers potentially eye the "rainy day" money, districts have been urged by the state Department of Education to build up contingency funds, Hughes said.

"This would be nothing less than one element of state government telling districts 'don't spend money,' and another part of state government saying, 'and now we're going to take it,'" he said....

Beshear's education choice: some pain or big cuts

Senate Bill 1 Implementation

Depends on Fed Dollars

This from Ryan Alessi and Jim Warren at H-L, photo by Ed Reinke:

The state's public universities could suffer minimal pain or double-digit cuts in 2012 depending on the fate of Gov. Steve Beshear's long-shot proposal for gambling.

University leaders didn't immediately leap Tuesday to support the governor's expanded-gambling plan, which faces a skeptical General Assembly.

Officials of the eight public universities and the Kentucky Community and Technical College System politely praised Beshear for what they called his commitment to preserve higher-education funding, then turned to lobbying the legislature.

University of Kentucky President Lee T. Todd Jr. said the presidents won't back any particular method for raising revenue.

"I firmly believe that the legislature and the governor want to help higher education if they have the resources," he said. "We'll leave it up to them to figure out where the revenue source comes from."

Beshear's plan largely aims to protect education.

The Support Education Excellence in Kentucky fund, the major source of money for K-12 schools, would be exempt from cuts for fiscal years 2011 and 2012 under the proposal. Beshear recommends preserving SEEK funds even if the gambling measure doesn't pass....

In an email message to EKU faculty today, President Doug Whitlock said,

Last night I attended the presentation of Governor Stephen Beshear’s 2010-2012 budget message to the Kentucky General Assembly. I would suspect that many of you have read or seen news accounts of that presentation.

Once again, Governor Beshear has shown his commitment to postsecondary education and his understanding of our value to the Commonwealth’s future...

Tomorrow, I will speak on behalf of the Kentucky higher education committee to the House Budget Review Subcommittee. In my remarks, I will encourage the legislature to consider the profound need for new revenue. Kentucky’s budget woes run far deeper than simply the downturn in the economy. There was a structural imbalance between recurring income and recurring expenses even before the economy soured. It is my sincerest hope that the Governor and General Assembly will work together to solve this issue whether through expanded gaming, some other form of revenue enhancement, or a combination thereof.

This process has just begun and will play out over the coming months. I will keep you informed at every appropriate opportunity. My request to you is to not succumb to alarmism and to continue to do the same fine job you are doing today. That is the best way to continue to communicate our worth and our dedication to the public policy makers of this state.

And from Toni Knoz at C-J:

Kentucky school districts would receive slightly more money per student under Gov. Steve Beshear's proposed two-year budget, but they would see cuts of about 2 percent to other programs and initiatives.

Beshear said one of his highest priorities is maintaining the current level of the state's formula for funding public schools, called Support Education Excellence in Kentucky, or SEEK.

His budget calls for schools to receive $3,891 per student in 2011 and $3,927 in 2012, slight increases over the $3,866 per student that districts are receiving this year.

“The best long-term investment that we can make in the future of our Commonwealth is educating our kids,” Beshear said Tuesday. “If we give them a proper education, they will be able to get the jobs of the future. If they are working, all of the rest of our problems take care of themselves.” ...

Kentucky Education Commissioner Terry Holliday said he was happy to learn that Beshear is proposing an increase in per-pupil funding, particularly because state funding has been flat the past several years.

“We are very happy that the governor held education as one of his top priorities,” he said.

Beshear's budget also includes $21.9 million over the next two years to implement Senate Bill 1.

But he said that amount is contingent on the state receiving Race to the Top federal grant money from the Obama administration. Race to the Top is an initiative that pits states against each other and rewards those that develop the best plans to improve student achievement.

“If we don't get that money, we will have to revisit (the budget) and see if we need to put additional state monies in there to implement Senate Bill 1,” Beshear said...

Sharron Oxendine, president of the Kentucky Education Association, applauded the governor “for continuing to protect education. I think he realizes the detrimental effect not funding education would have on the commonwealth.”

Oxendine also said she believes Beshear is “doing the best he can with what he's got.”
Beshear's budget proposal also includes an additional $173 million over the next two years to cover the higher cost of health insurance for school district employees and $150 million in bonds for school facility improvements.

Gov. Beshear: no mid-year SEEK cut as part of revenue shortfall plan

Excess SEEK coming this spring

This from Brad Hughes at KSBA:

Kentucky school leaders, fearful of mid-year funding cuts to offset a $100 million state revenue shortfall, got a double dose of good news Monday from Gov. Steve Beshear: not only will there be no cut in the current fiscal year’s SEEK allocation, the state expects to give districts an additional $30-$40 million in April, May and June to offset non-SEEK cuts in statewide K-12 spending.

“The bottom line (is) that every district will see budgetary relief and most will be made whole (from earlier state cuts),” Beshear said in a Capitol news conference. “It will help us to continue to maintain our commitment to our core priorities – the greatest of which is educating our children.

“While this is good news, a word of caution to our school districts: conserve your funds as much as possible. The challenges confronting us in the next two year budget are formidable,” the governor said.

Let's hope House Speaker Greg Stuimbo got the memo. By contrast, he has advocated capturing school contingency funds. If that were to come to pass, it would serve as a major disincentive to effective planning and frugal habits, both of which Beshear advises. On the other hand, Stumbo's promotion of tax reform is the right idea.

“We drew a line in the sand and preserved SEEK last June. In the budget passed last summer, I made a promise to our principals, our teachers and our students. I told them that if there proved to be an overage in the SEEK allocation in this fiscal year, that I would make sure that that money went back to the individual school districts and not to the General Fund,” Beshear said.

“The good news is that there will be extra money this year. We won’t know the final number until late February, but it will be between $30 million and $40 million. That money will not be swept back into the General Fund, but will be sent back to districts through the Department of Education’s SEEK formula,” the governor said.

“We estimate that the additional funds distributed to the schools through the SEEK formula will more than offset the impact of the 3 percent cuts in every district in this state, (and) in most districts, will offset the cuts in non-SEEK funding made last June.
“By distributing the additional SEEK funds through the formula, districts will be able to manage at the local level in a way to best meet the needs of the schools and their students,” Beshear said.

Education Commissioner Terry Holliday joined Beshear at the news conference and praised the governor for his decision.

“The future of Kentucky is in our classrooms today. By holding SEEK harmless in this process and by committing the excess SEEK dollars to help districts become whole once again, we have once again as Kentuckians shown our support for education,” said Holliday. “I will be sending an e-mail and directions to local superintendents this afternoon, describing where the 3 percent cuts are and the process we will follow to distribute the excess SEEK money.”

The governor announced a $108.3 million budget reduction order for the current fiscal year to include a cut of 3 percent to state agencies, including the Department of Education. The major elements of the budget change are $49 million in spending cuts, $25 million in federal stimulus funds and the remainder in excess, unbudgeted agency funds.

Holliday said the KDE funding cut — $10 million – will be done by replacing some planned state spending on technology programs with federal funds; delaying until next year some $4 million in Read to Achieve and Math Achievement Grants; and capturing the remaining $2 million in the state textbook account.

“What we’ve done is to cut without affecting people,” the commissioner said. “The extra SEEK dollars will more than offset these cuts and the cuts from last June.”

Beshear noted that the current biennial budget gives districts greater flexibility to use state funds than had been the case previously. Both the governor and Holliday said by returning the excess SEEK funding through the SEEK formula, that flexibility is determining where to spend the money is further increased.

In terms of the upcoming biennial budget efforts, Gov. Beshear said, “I’m going to try every way possible to preserve SEEK in next two year budget. That is my highest priority. I’ll do everything humanly possible to avoid cutting SEEK.”The governor will present his proposed two-year budget to the General Assembly on Jan. 19.

This from The Commish's Monday email to Supts:

Governor’s Budget Reduction Order and Impact on Education

As indicated in the Governor’s budget reduction order that was signed this afternoon (see attached press release and attachments above), the Kentucky Department of Education (KDE) will be implementing a 3% budget reduction plan rather than a 6% plan. The reductions that will be implemented by the plan are as follows:

Education Technology - KEN $ 765,000
Education Technology - KETS $ 975,000
Family Resource Youth Services Centers $1,714,300
Partnership for Successful Schools $86,000
KDE Assessment Funding $45,000
Read to Achieve Carry-forward Dollars $3,000,000
Math Achievement Carry-forward Dollars $1,000,000
Textbooks $2,016,400
Life Insurance $399,900

TOTAL CUTS $10,001,600

KDE has made every effort to minimize the impact of these cuts on school districts. The Governor’s good news is that we anticipate excess SEEK funding will be available in the last quarter of this fiscal year to adequately offset the impact of these cuts. The excess SEEK funding will be received as part of the April, May and June SEEK payments and can be used for any expenditure on which regular SEEK funds can be spent. Each district’s portion of the excess SEEK funds will be based on whatever its share of the current SEEK allotment is per House Bill 4, passed in the 2009 special session.

Regarding the cuts listed above:

· The Office of Education Technology will be coordinating with school districts to ensure that cuts to KETS and KEN funding will not directly impact technology hardware or services. We anticipate using one-time e-rate funding to ensure the dollars for these purposes continue to be provided for the remainder of the fiscal year.

· Excess SEEK funding may be used to offset cuts to FRYSCs and Textbooks.

· Cuts to the Partnership for Successful Schools, KDE Assessment Funding, Read to Achieve and Math Achievement will be taken from unobligated dollars and will not impact current grant dollars to school districts.

· The cut to life insurance costs is based on savings generated from a reduction in costs as of January 1, 2010 and will not affect school districts at this time.

Districts should be mindful that the excess SEEK dollars must be committed to appropriate programs by June 30. School districts may wish to commit some excess SEEK funding for qualified expenses for the next biennium, in the event that programs are not fully funded in the upcoming budget. Further guidance on spending excess SEEK dollars will be forthcoming from KDE.

Money won't come from Santa

...that's the conclusion of Commissioner Terry Holliday after hearing a presentation from Kentucky Chamber President David Adkisson.

This from Dr H's blog:

Corrections Spending in Kentucky
· Spending has seen 44 percent increase since 2000, as compared to 33 percent increase in General Fund.
· It costs $19,000 per year to incarcerate a prisoner and only $9,200 a year to educate a child in P-12.
· Could we not save money on corrections by reducing our dropout rates and investing in early childhood education?

Medicaid Spending in Kentucky
· Medicaid budget is growing twice as fast as the General Fund budget.
· Medicaid enrollment increase is three times the predicted and budgeted amount.
· There will be a significant decrease in federal funding support for Medicaid in FY11.
· Medicaid moved from 6.5 percent of the state budget to the current 13.7 percent.
· Is there not a correlation that better-educated citizenry has better health?

...or should we say, $60 million?

This from Marc Murphy at C-J:

Nearly $40 million Already Cut from SEEK

How has the state budget already cut Kentucky's SEEK funding? Prichard Counts the ways.

Kentucky is sending districts $39,723,567 less in SEEK funds this year than the state provided last year...

So, let's stop saying the state hasn't cut P-12 funding yet. We've actually seen cuts to the Department of Education, the Education Professional Standards Board, and to smaller state funding grants, and we've seen nearly $40 million cut from SEEK itself.

The Budget Blues

This week's blog blast from the big boss is all about the dollars - or lack thereof. At Dr. H's Blog Commissioner Holliday writes,

In my 38 years of education and over 20 years as an administrator in charge of budgets, the past two years have been the most difficult budget situations I have ever encountered. As I travel across the state, I am hearing from local superintendents that they, too, are encountering very difficult budget situations. While the national economy has shown some signs of recovery, state and local revenues have not shown similar signs.

The fact that the national economy is rebounding is great news. The fact that the recovery is based on unprecedented levels of federal bailouts for banking (the industry that got us into this mess and is still spending millions on lobbyists to forestall regulation) is less comforting, particularly since federal stimulus funds are running out. I sure hope the recovery numbers look even better by this time next year and unemployment levels are back down. But we'll see.

Holliday optimistically suggests,

While we are in difficult times, I have every belief that our great nation can recover and our state and national leaders will find ways to ignite new growth in our economy. During these times, we must listen and work with each other rather than blame each other.

Oops. Too late.

As for the current situation, Holliday expects decisions on $20 million in cuts to education to be known by early January.

This is the latest reduction of six that have happened in the past two years. We have made the easy reductions. We have reduced the travel, the professional development, the textbooks, the costs that are not closely associated with the classroom. We have frozen all hiring at the Kentucky Department of Education. We have not filled vacant positions. We have eliminated every discretionary dollar that we can find.

Now, we have run out of options. We must begin to reduce some program dollars. There are no easy choices. Every program that we are reviewing has a strong constituent base that truly believes any budget cut would decimate the program.

We have established a few priorities for this next round of reductions. We are attempting to save positions in schools and districts. We are trying not to further reduce school safety or extended school funds, which have already been greatly reduced. We are looking at dollars that have not yet been expended in programs so the reductions will not require districts to make up the difference.

Hold on to your skivvies boys & girls.

BS from GS

...but no mention of what Kentucky really needs to help avoid this annual drama. Barring a political miracle - legislative leaders who actually want to solve long-standing revenue problems - Kentucky will still not have what it needs; a new tax code.

This from Speaker Stumbo in C-J:

Stumbo explains stance on 'rainy day' funds

As Gov. Steve Beshear and the General Assembly prepare for the upcoming legislative session, it is becoming increasingly clear that the state's two-year budget will be the most challenging Kentucky has faced since the Great Depression.

Federal stimulus dollars have helped significantly, but unless Congress provides additional funds, the stimulus dollars will run out by the budget's second year. Barring an economic miracle, there will be considerable budget gaps and no painless way to fill them.

We must also consider skyrocketing health insurance and retirement costs, increases in a Medicaid program that already covers a fifth of our population and the growing needs of our schools and universities. Each of these areas must be adequately funded if we hope to move forward as a state.

It was with this in mind that I discussed the possibility of using a portion of the surplus funds that are kept by our elementary and secondary schools for unplanned expenses and “rainy days.”

I want to make it clear that I do not believe these funds can be used for any programs or expenses outside of the school's district. In fact, as attorney general, I filed litigation to protect education dollars.

The surplus funds are a mixture of local and state dollars prudently set aside by the school districts for future needs and expenses. It would be patently unfair to “rob Peter to pay Paul,” but it may be time for Peter and Paul to help themselves more during these rainiest of days.

I believe all options need to be considered as we begin writing the state's budget in the next several months. If this is an unprecedented suggestion, it is because we are in unprecedented times.

In our current budget, kindergarten through high school accounts for more than 40 percent of our state tax dollars; when you add postsecondary schools, the figure for education jumps to 58 percent. Critical health and family services and the judicial and justice systems push the total over 90 percent.

Because so much of the state's budget goes to these areas, they are the ones most affected by cuts that have topped more than $1.5billion during the last two years. Additional cuts are expected to exceed a billion dollars in the upcoming two-year budget. Federal stimulus dollars have helped us balance our current budget, but these are one-time funds and not a permanent revenue source.

I have no doubt that we will find a way to live within our means, but it will not be easy. My goal is to continue protecting, if not increasing, school funding. Reducing money for education would have negative effects lasting for generations. School surplus funds may or may not be part of that equation, but if they can be a bridge to better days, it is an idea that at least deserves to be discussed.

Textbook Money Slashed to Balance Budget

In the latest round of buget cuts Gov. Beshear spared specific items such as the SEEK funding formula, school employees’ health insurance and the Kentucky Teachers Retirement System but other areas, like textbooks, took a whallop.

At KSBA, Brad Hughes reports that,

Education Commissioner Terry Holliday told Kentucky superintendents Wednesday that the state’s ongoing revenue shortfall will mean a 12.7 percent cut in the Department of Education’s operating budget, and an overall reduction in state spending on P-12 programs by 2 percent.

In an e-mail to the superintendents, Holliday said, “Rather than constraining districts by applying the cut to all programs, KDE’s plan calls for the reduction to be applied to the Flexible Focus Funds and specifically to textbooks.

And how big a whallop? Here's an example of cuts in three districts.

District ------FY10 Initial------FY10 Revised
Daviess----------$352,173---------- $39,162
Fayette---------$1,165,815---------$132,627
Gallatin----------$52,025-----------$5,655

Beshear Cuts increase from 2.6% to 4%

This from KDE recently:

The Office of the State Budget Director (OSBD) and the Governor’s Office for Policy and Management (GOPM) have indicated that the FY 2010 4% Budget Reduction Plan will be implemented.

The Kentucky Department of Education’s (KDE’s) plan for the P-12 budget reduction, which will total $13,863,100, proposes that program-area reductions be made from the Flexible Focus Funds. KDE operations also will sustain a 4% cut.

Governor Beshear's explanation was,

Though I proposed 2.6 percent cuts to most state agencies during the special legislative session in June, as many of you know, two new programs that will result in reduced tax receipts were legislatively enacted, along with some additional spending. Those additions have exacerbated the shortfall and resulted in the need for us to make additional spending reductions this fiscal year....

However, I will continue to maintain my commitment this budget year to protect critical education programs from cuts. If Kentucky is going to have a chance at succeeding in the modern world, we cannot back away from investing in our future, our children. That is why, despite these very difficult economic times, I will not cut SEEK, the basic K-12 funding formula for schools, funding for health insurance for public employees and teachers, the Kentucky Teachers Retirement System, higher education or adult education.

Budget deal will cause more cuts

KSN&C is hearing about cuts to some agencies, like CPE, in the 8.4% neighborhood. Less for K-12 education, and that, outside of the SEEK base. Those university presidents, like EKU's Doug Whitlock, who held back 4% from the current budget cycle are starting to look like geniuses.

This from Pat Crowley at the Enquirer:

Gov. Steve Beshear called Kentucky lawmakers to Frankfort last month to deal with a $1 billion budget deficit. But while plugging the budget hole, lawmakers also increased state spending, which the governor says will force deeper cuts.

Beshear said a combination of tax incentives and spending increases approved by the General Assembly will add nearly $60 million a year to the budget. Most of the deficit was plugged with nearly $800 million in federal stimulus money.

"Those decisions today will have profound consequences tomorrow," Beshear said after the session's end. "And there should be no doubt of that among everyone involved in crafting this budget revision." ...

On Tuesday in Frankfort Beshear said that he will be able to determine what can be cut from the state budget to pay for the new spending by mid-July. Most public school funding, corrections and Medicaid are off the table, he said...