House budget passes. Here’s what’s in it.

The House passed their version of the state’s next two-year spending plan last night. Below are the key points of interest for GLI:

Increased Funding for Pensions
One of the top issues for GLI during the 2016 session is shoring up the unfunded liabilities in the state’s teacher and public employee pension funds. The House continued to fund the ARC (actuarially required contribution) just like the Governor’s budget for the KRS pension fund and increased funding in the KTRS to 100% of the statutorily required funding levels as compared with 66% in the Governor’s budget.

Increased Funding for Education
Education is always a top priority for GLI and there are four areas we are focused on in this budget.

Pre-K-12 – The House budget, just like in the Governor’s budget, did not include cuts to the primary funding formula for K-12. However, the House did reverse cuts the Governor proposed to some of the education support services, like youth resource centers and pre-K. In particular, GLI was pleased with the increase in preschool eligibility from 160% to 200% of the federal poverty level.

Postsecondary – The Governor proposed cuts of 4.5% in FY 16 and 9% each year in FY 17 & FY 18 to the Commonwealth’s public postsecondary institutions. GLI was concerned about the impact these cuts would have on our universities and workforce development efforts. The House removed those cuts in their budget. The University of Louisville saw 1% and 4.25% increases from the Governor’s proposal in FY 17 and FY 18 respectively.

The Governor had also proposed making the postsecondary institutions funding subject to performance or outcome-based funding beginning in FY 18 with 33% of their base building up to 100% by 2020. The House removed the performance funding provisions, but did set up a steering committee to establish equitable performance funding in the future.

Scholarships – The House provided $33 million to fund their Work Ready Kentucky Scholarship Program. This new program would provide free, last-dollar tuition funds for graduating high school students attending KCTCS. This program was not something included in the Governor’s budget. The Governor’s budget also moved all lottery proceeds for education to a new workforce development scholarship fund. The House directed these proceeds to scholarships as well, but they utilized the College Access Program (CAP) and Kentucky Tuition Grant (KTG) programs for need-based aid administered by KHEAA.

The budget also provided $57 million to the needs-based Kentucky Tuition Grant and College Access Program.

Governors Scholars Program – The House restored funding to Kentucky Governor’s Scholars Program with an additional $75,000 General Fund support in each fiscal year.
 
Workforce Development Bond Pool Removed
To meet the demand for advanced manufacturing jobs, other high-skill and information technology jobs, the Governor provided for a $100 million bond pool. These dollars would have been co-invested with local communities for these projects. The House removed that bonding capacity in their version of the budget. GLI is strongly supportive of increased dollars for workforce funding and hopes that the bond pool or an alternate funding source will be reintroduced to meet Kentucky’s growing workforce needs.

Rainy Day Fund
The House budget paid for many of its increased expenses by cutting the bond pool, as mentioned above, and substantially decreasing the amount set aside for the State’s ‘Rainy Day’ fund from $524 million. The Fund still increases from $209 million to $283 million, which is larger than the 2001 record.

State Offices & Agencies
The House also restored funding that the Governor’s proposed budget cut to the budgets of state elected officials (attorney general, secretary of state, etc.), the Department of Veterans Affairs, the Executive Branch Ethics Commission, and some other agencies.
 
Funding Critical Needs in Greater Louisville:

  • Quality and Charity Care Trust Fund would receive up to $4.5 million in FY 17 and $6 million in FY 18 for University Hospital. The funding is contingent on $2.5 and $5 million respectively from Metro Louisville.
  • Louisville Waterfront Development Corporation would receive $450,000 in appropriations to be used for projects related to Waterfront Park.
  • West Louisville FoodPort would receive $4,139,200 in FY 16 for Phase I of the project
  • Kentucky Innovation and Commercialization Center Program received sufficient funding to maintain 13 innovation and commercialization centers through FY 18

 
Next Steps
The budget now travels to the Senate where their version of the state’s spending plan is expected within the next week.  Subsequently, a conference committee made up of legislative leaders will meet to hammer out any differences before legislators break for veto recess on March 30.

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