State education commissioner makes only a third of governor's requested 17.4 percent cut in agency's budget to avoid jeopardizing the ability of districts to provide "constitutionally guaranteed education"

Courier Journal, Louisville, Oct. 12, 2017

Kentucky state agencies resist or drag their feet on Gov. Bevin's budget cut request
By Tom Loftus

Some state agencies asked by the Bevin administration last month for plans to slash spending by a whopping 17.4 percent have pleaded to be spared, and the legislative and judicial branches of government have not even submitted any cutback plans.

Bevin’s budget office wanted the plans by Sept. 25 as an initial step toward cutting spending by $350 million. But as of Thursday at least $114 million in requested cuts has been answered with either a plea to be spared or no cutback plan at all, according to a review of responses of several state agencies.

State Budget Director John Chilton did not respond to a phone message and email seeking comment, so it is not clear whether the resistance and other issues raised in response to the big cutback request might affect an anticipated administration order to cut spending later this fall.

But the resistance shows that some agencies are saying that such a big cut – on top of a series of budget reductions that began with the Great Recession in 2008 – would make it impossible to carry out legally mandated duties.

“School districts rely on state education funding to provide Kentucky’s 655,000 public school students with their constitutionally guaranteed education,” Education Commissioner Stephen Pruitt said in a response explaining why he cut only $23 million when $70 million was requested at the Department of Education. “Any additional reductions jeopardize the ability of districts to provide that education.”

On Sept. 8, Chilton sent letters to most agencies saying a preliminary revenue forecast projected that tax revenues will fall $200 million short of budgeted levels in the fiscal year that began July 1. He also said the state’s reserve fund — the “Rainy Day” fund — will run dry this year and needs an infusion of $150 million to protect Kentucky’s credit rating.

Chilton requested plans of how each agency would cut 17.4 percent of its funding in preparation for a likely formal spending reduction order later this year.

His letter suggested the move may be a first step toward a fundamentally leaner state budget that, beginning next year, may have even less money for agencies because big new outlays are likely to be required to defray Kentucky’s massive pension debt.

“We must start preparing now for the ongoing financial challenges," Chilton wrote. “... The current fiscal constraints present a unique opportunity to evaluate the effectiveness and necessity of programs within state government. Limited resources must be allocated to programs providing critical services and a strong return on investment.”

Certain areas of government were not asked to make cuts for now, including Medicaid, the core public school funding program known as SEEK, the prison system, state universities and debt payments.

Attorney General Andy Beshear, whose office was asked to cut $1.9 million, quickly called a news conference saying he could not comply because the cut would be illega

Beshear said cuts cannot be imposed by a governor and his budget director until there is an official revenue forecast projecting a shortfall. Beshear noted that Chilton was acting only on a preliminary forecast. Beshear also said that while it is worthy to want to replenish the state’s Rainy Day fund, the law prohibits making spending cuts to do so.

Beshear said he recognized the need for cuts and was willing to participate in a “meaningful way.” But he said, “In the end, the law is the law, and it is my job to enforce it.”

Bevin spokeswoman Amanda Stamper said Beshear was “grandstanding” and that the administration had “merely asked” agencies for plans to address the financial challenge.

Chilton has since asked the panel of economists that makes the revenue projections, the Consensus Forecasting Group, to make a new “official” forecast of current year revenues at a meeting it has scheduled for Friday so that the administration has “the maximum amount of time to face current year budgetary challenges.”

Commonwealth and county attorneys were asked to cut $15.9 million. But Regina Carey, executive director of the Prosecutors Advisory Council, responded with a seven-page letter warning that the cuts would cause massive layoffs, “systemic breakdowns in the criminal justice system,” and jeopardize public safety.

“On behalf of the citizens of the Commonwealth, the innocent victims of crime…” Carey pleaded, “we again appeal to you to exempt the Commonwealth’s prosecutors from ANY budget reduction plan.”

Likewise, the head of one small state agency, John Steffen, executive director of the Kentucky Registry of Election Finance, told Chilton that past funding cuts have left the agency with no more room to cut.

“We simply have no more to give without losing the ability to fully perform our statutory mandates,” Steffen wrote.

Pruitt said in the response from the Department of Education that even his proposed plan to cut only a third of the $70 million requested “will reduce the quality of instruction in Kentucky schools and the learning of Kentucky’s students.”

Pruitt’s plan included reductions of: $8.2 million for textbooks and instructional devices in the classroom; $4.6 million for professional development for teachers; $4.5 million for Family Resource and Youth Service Centers that provide tutoring, counseling and other services; and $2.6 million for operations and staffing at the department in Frankfort.

The legislative branch, controlled by Bevin’s fellow Republicans, was asked to cut $11 million but hasn’t responded to Chilton, either.

“There continues to be discussions among legislative leadership on this topic. We have no plan yet to respond formally to this request and have not yet done so,” said a statement from the Legislative Research Commission on Thursday in response to a request from the Courier-Journal for how it planned to make the cuts. “The General Assembly needs to be prepared for a variety of contingencies, with the most pressing being the upcoming special session.”

The judicial branch, meanwhile, “is still evaluating the governor’s request” that it cut $38.9 million, said Leigh Anne Hiatt, spokeswoman for Kentucky’s court system. She declined to say why the court’s response has been delayed by more than two weeks.

When the cuts were requested more than a month ago, Kentucky Chief Justice John D. Minton Jr. released a statement that said he recognized harsh financial realities facing the state. But he said, “My priority is to ensure the state court system has the funding we need to meet our constitutional and statutory obligations.”