Kentucky

State issues affecting p-12 funding

Since 2008 FY, real school-aid has continued to remain constant by not keeping up with the rate of inflation. In fact, the state of Kentucky’s contribution to real K-12 school-aid has demonstrated a steady decline for nearly the past two decades between FY 1993 and FY 2012. This decline is particularly noticeable compared to the level of the state’s contribution during this first four years (1993–1997) and the last four years (2008–2012) of this period (Baker 2014, pp. 18–19). In recent years, this decline in state support has been met by a corresponding increase in the local and federal state-aid. Table 1 below shows this inverse relationship between state aid on the one hand and local and federal contributions to schools on the other hand during this nineteen year period (Education Finance Center-NCES 2015; State Fiscal Reports). This trend is not unique to Kentucky. Nationally, especially since the Recession of 2008, local and federal aid to schools has climbed as state revenues allocated for schools have nosedived.

In this context of declining state-support, the Kentucky General Assembly (KGA) proceeded on July 1, 2015 with its allocation of school-aid at a base funding of $3911 during the second year of the 2014–2016 biennium, and did so based on the statutory language that prescribed the level of school funding when the state budget was adopted on March 31, 2014. Kentucky state-aid allocations relieved many schools from stiff budget short-falls and averted school districts from adopting contingency budget plans which prepared proactively for massive layoffs. Notwithstanding this modest relief, the actual state-aid allocation came short of Governor Steve Beshear’s original proposal. As in FY 2014, Operating-aid or SEEK formula aid allocations in real dollar at $2,486,674,900 for 2016 FY surpassed the $2,401,205,700 allotted in 2014 FY. (SEEK is Kentucky’s operating aid formula, and it the acronym for Support Education Excellence in Kentucky). This increase is higher than the increase in categorical funding in real dollars at $312,754,900 in 2015 FY; nonetheless, the actual percentage increase in categorical funding at 11.2% for 2016 FY exceeds the percentage increase in Operating-aid at 1.3% at 2016 FY. When factoring the exorbitant costs of health insurance and life insurance in categorical spending, the actual percentage increases of categorical funds is 11.2% in 2016 FY or the level allocated in 2014 FY.

Table 1.

The Percentage Distribution of State, Federal, and Local Kentucky School Revenues: 1993–2012

Operating-Aid

For the 2015–16 school year (or second year of the 2014–2016 biennium), operating-aid allocations increase noticeably in several funding areas of the Support Educational Excellence in Kentucky (SEEK) program, which is Kentucky’s school-finance policy enacted originally as part of the Kentucky Education Reform Act (KERA) of 1990. As in FY 2015, these funding increases do not fundamentally change Kentucky’s modified foundation program for FY 2016, featuring pupil weighted factors and a two-tiered Guaranteed Tax Base (GTB) that adjusts and increases an actual school district’s revenue base significantly beyond its foundation base of funding. These funding increases also do not overshadow changes in a school district’s operating aid occurring from a school’s Average Daily Attendance (ADA) growth or decline.

The particular aid increases in the SEEK formula include considerably more dollars during 2016 FY for adjusted based aid as well as for Tier I equalization aid. Furthermore, additional aid continues to be allocated during this second year of the biennium for the Facilities Support Program of Kentucky (FSPK). The KGA also has ruled a 2% increase in annual teacher salaries during the 2016 FY. Along with this increase in teacher-compensation, the KGA has considerably increased funding in the line-item for Teacher’s Retirement, while health insurance costs have persistently climbed for school district employers. Along with these modest revenue and noticeable expenditure increases, the KGA has kept aid for transportation constant for 2016 FY at...