Governor’s plan restores funding to Kansas schools, pays down debt, restores fiscal stability — without raising taxes

Topeka, Kan. — After years of financial crisis, upside down budgets and devastating cuts to Kansas’ most prized investments, Governor Laura Kelly has released a balanced budget to chart a decisive, sustainable path forward. By law, a newly elected governor has 21 days to submit a budget to the Kansas Legislature. Kelly’s budget recommendations come just three days after taking office, nearly three weeks ahead of schedule.

“It’s going to take time for Kansas to heal from the damage inflicted over the last eight years, so we don’t have a moment to lose,” said Kelly. “I worked diligently to craft a balanced budget that will usher in a new era of shared prosperity and growth. I look forward to lawmakers’ input, and working together to enact it.”

Kelly’s budget restores fundamental principles of Kansas fiscal responsibility, all without a tax increase:

  • Achieves Structural Balance: The Governor’s Budget Recommendation maintains structural balance, ensuring that state expenditures do not exceed revenues. It also meaningfully reduces the state’s irresponsible reliance on onetime funds.
  • Rebuilds State Savings: The Kelly Budget includes a statutorily required ending balance totaling $686 million. The 9.1 percent ending balance is the greatest offered in a Governor’s Budget Recommendation in twenty years, a reflection of Kelly’s commitment to fiscal discipline.
  • Reduces State Debt: Kansas accumulated a record level of debt over the last eight years, just to pay basic bills. The Kelly budget takes a significant step in eliminating that debt in an effort to improve the state’s credit rating. Her proposal fully repays a $317.2 million loan issued in 2017 from the Pooled Money Investment Board. This will retire the debt five years earlier than planned.

Additionally, the Kelly budget accomplishes critical policy goals:

  • Restores School Funding: The budget adopts recommendations offered by the Kansas State Board of Education to restore investment in Kansas classrooms by $92 million. It will not only meet state obligations to Kansas children, it will end the decades-long cycle of litigation over Kansas school finance. The Governor separated education funding from the rest of the budget and is introducing this plan as a separate piece of legislation. Kelly urges lawmakers to enact this plan by February 28th in order to provide Attorney General Derek Schmidt appropriate time to comply with a court-ordered deadline.
  • Foster Care: The number of children in the Kansas foster care system has skyrocketed 45 percent since 2011. Costs associated with this are estimated to increase 14.5 percent from fiscal year 2019 to fiscal year 2020. The Kelly budget includes funding for 55 additional FTE child welfare positions to better care for and protect our state’s most vulnerable children. Additionally, the budget includes $7.4 million for the Family First Prevention Services Act, landmark federal legislation enacted last year. This investment will draw down additional federal funds and inject a total of $9.3 million into services that will prevent children from entering the foster care system.
  • KanCare Expansion: The Kelly budget includes $14 million to expand critical health care coverage to 150,000 low-income Kansans. This will not only improve the health and vitality of the state, it will help keep Kansas hospitals open and strengthen our economy as a whole. One study by George Washington University found that expanding KanCare would create 3,500 – 4,000 new jobs over five years. Kelly will convene stakeholders to collect input and introduce legislation to accompany this budget priority by the end of January.
  • Infrastructure Investment: After raiding over $2 billion from the Kansas Highway Fund over the last several years to pay for failed tax policy, the Kelly budget begins phasing out the practice of diverting highway dollars from their intended purpose. Kelly’s budget reduces transfers from the State Highway Fund by $100 million, with the goal of eliminating the approximately $300 million transfer altogether by FY 2023.
  • Public Safety: The Kelly budget adds $3 million in funding for Kansas corrections officers. Years of underfunding created a crisis in prison staffing shortages, resulting in 400 current vacancies throughout the state. Without essential staffing, dangerous inmate disturbances, reports of injured correctional officers, overcrowding, and other problems have occurred at nearly every state prison. Additional funding will help ease this burden and keep Kansas communities safe.
  • State Employee Work Force: In order to ensure state employee salaries remain competitive and keep abreast of inflation, the Governor recommends increasing state employee base pay by 2.5 percent, or $22.3 million. This will enable Kansas to recruit and retain high quality workers to fulfill the critical obligations of state government.
  • KPERS Re-amortization: The Kelly budget proposes a re-amortization of KPERS to make state retirement contributions more realistic and sustainable over time. This will enable Kansas to meet all obligations to current and future Kansas retires while enabling the state to invest in essential services.\

“This budget doesn’t fix all the problems created over the last several years, nor does it fulfill all of my administration’s goals. But it is a prudent first step that will set the stage for a brighter, more prosperous future — all without a tax increase,” said Kelly. “If we move forward with caution, we can build on our progress in the coming years.”

Kelly also cautioned lawmakers to vigilantly protect both sides of the ledger.

“Our tax code has been on a roller coaster ride over the last few years, both at the state and federal levels,” said Kelly. “The full impact of those sweeping changes remain unclear, and we cannot afford to continue making inaccurate assumptions about the future. Recovery from the Brownback experiment is underway, but we have no margin for error. After fighting so hard to stabilize our fiscal health, we must resist temptation to jump back into a hole.”

The Governor’s full budget recommendation can be viewed here.