Just past the midway point of the 2018 General Assembly, education-specific bills have been overwhelmed by debate over the biennial budget and pension reform, and even by controversy over previous action, KSBA Governmental Relations Director Eric Kennedy told a clinic crowd at the association’s annual conference.
“Not very many education-specific bills have been filed, compared with last year,” he said. Even a few education committee meetings have been cancelled, he added.
KSBA Governmental Relations Director Eric Kennedy, left, talks with Pineville Independent
school board Chairman James Golden (center) and Pineville Independent Superintendent
Russell Thompson following his legislative update at KSBA’s annual conference.
The atmosphere has been charged with controversy over pension reform and budget cuts, along with the outpouring of educators filing for election to the legislature. “Those things have had an impact, and I think there’s a little bit of a desire among some in Frankfort not to do too much this session to rile people up any more than they are already riled,” Kennedy said.
The pace, however, is picking up with the filing of the House budget and pension reform bills. “Everything of major importance for us is going to happen between now and April 14,” Kennedy said. “It’s kind of a madhouse up there even more than normal. Day to day, we almost don’t know what to expect.”
Budget
The House budget bill, HB 200, is much better for public education than the budget proposed by Gov. Matt Bevin, Kennedy said. “This would restore most of the funding that had been cut in the first proposal,” he told attendees. “This is a much improved budget.”
Key improvements include:
• Fully funds the actuarially required contribution (ARC) for the state pension systems, as the systems are currently structured.
• Increases the SEEK base per-pupil guarantee from the current $3,981 to $4,055 in the first year of the budget.
• Keeps SEEK transportation funding at the current level.
• Provides full funding for health insurance for active employees.
• Restores funding for family resource and youth services centers.
• Increases funding for Safe Schools.
• Provides equalization funding for districts that have levied “new nickels”: Nickels levied before Jan. 1, 2016, would get full funding; nickels levied after Jan. 1, 2016, and before Jan. 1, 2018, would get 25 percent funding.
• In conjunction with HB 366, directs all funds from the Volkswagen settlement for 50 percent grants to help school districts buy new fuel-efficient, clean-fuel buses.
• Restores funding for day treatment programs.
• Includes no funding, or funding provisions or rules, for charter schools.
• Reinstates district flexibility provisions typically in budgets, including those pertaining to school council allocations, newspaper publication requirements for financial reports and school report cards, and use of capital outlay funds
The bill also encourages, but does not require, districts to cut administrative costs, and requires districts to report those figures annually to the General Assembly. That latter step, Kennedy said, “will be a benefit for us, to get public awareness of what the real numbers are out in the districts.”
Another financial burden involving pensions, a huge increase in contributions for CERS-covered school staff, is not addressed in the budget bill. But a separate bill, SB 66, would phase in those costs so that districts would pay an increase of no more than 12 percent year over year. “We think that is about the best fix we can hope for for that,” Kennedy said.
HB 366, a revenue bill, “will be the subject of a lot of conversation,” Kennedy said. Most importantly, the revenue generated by the bill – amounting to perhaps $250 million annually – will be needed to fund the level of spending proposed in the House version of the budget bill, which would have to be cut if HB 366 is not approved in its current form. It raises revenue through a combination of a 50-cent per pack increase in the cigarette tax, a decrease in the personal and dependent tax credits in the state individual income tax, and a first-in-the nation tax on opioid medications.
Pensions
Like the budget bill, SB 1, the pension reform bill, is an improvement for school boards compared with the reform bill proposed last fall. However, there are still major concerns, Kennedy said, particularly because SB 1 requires districts to pay 2 percent of payroll for teachers hired after Jan. 1, 2019 toward the hybrid cash-balance pension system it creates for them. As current teachers retire – and about 20 percent of them are now eligible – “that amount of money you would be paying would rise very quickly, and eventually all of the teachers would be in the new benefit structure, and you would be contributing toward them all,” Kennedy said. “Once we open this door, it will be easy in any budget crisis situation to take that to 3 percent or 4 percent and so on.”
The bill also would largely remove the statutory inviolable contract provisions in the Teachers’ Retirement System for those who enter it on or after Jan. 1, 2019, which means adjustments can be made to the retirement plan – as well as to CERS and other plans – in the future by the General Assembly.
Most recently, a Senate committee substitute for SB 1 amends the proposed reduction in annual cost-of-living increases for retired teachers and revises the cap date for using unused accumulated sick leave.
Financial aid
Kennedy also reviewed many other bills affecting schools. Attendees were especially interested in a pair of bills driven by the financial straits some districts have found themselves in due to vanishing unmined coal tax revenues. In conjunction with the budget bill, HB 141 would provide $7 million for the already-established but unfunded emergency revolving school loan fund. It is designed as a short-term fix to keep these districts afloat, Kennedy said. At least four districts may need to use this option.
HB 595 also is aimed at financially teetering districts, allowing for possible county-to-county district mergers driven by insolvency. Currently, state law addresses only mergers between county and insolvent independent systems. State Education Commissioner Stephen Pruitt said this would be an option of last resort, Kennedy reported, but an amendment is being sought to the bill because it does not specifically say that. Because many of the troubled districts are in the same area of eastern Kentucky, Kennedy, who thinks the bill will pass, said the effect of merging two bordering insolvent systems is unknown.
As always, Kennedy stressed the need for school board members to contact their lawmakers to both lobby for individual bills and to praise them for passage of legislation that helps public education.