Legislative Update: Senate Passes Budget Revisions

Lawmakers are looking to finish their work on the budget by next Tuesday to preserve their ability to override any gubernatorial vetoes. After receiving the House’s budget just one week ago, today the Senate passed their version of the state’s next biennial budget. The Senate budget more closely resembles the Governor Bevin’s budget, but

includes some minor distinctions. The Senate kept most all of the Governor’s proposed cuts to state government at 4.5% current year and 9% in FY17 & FY18.

The key provisions of interest to GLI members include:

Pensions: The Senate budget contributes more than the House or Governor’s proposed budget to address Kentucky’s ailing public employee pension funds. The Senate budget would contribute $1.195 billion compared to $1.123 billion (House), and $845.5 million (Governor).

Education: The Senate maintained the Governor’s proposed cuts to the non-SEEK K-12 portions of the budget as well as maintaining the Governor’s proposed 9% cuts in FY17 & FY18 for postsecondary institutions. Additionally, the Senate adopted a similar position to the Governor in regards to performance funding for postsecondary education. Beginning in FY 18, 25% of university funding would be subject to performance funding metrics, like: degrees produced, graduation rates, closing achievement gaps, and types of degrees.

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Senator Chris McDaniel presents on the Senate version of Kentucky’s two-year spending plan. (LRC)

Scholarships: The Governor and the House both set aside all lottery proceeds for education, but dedicated those to different programs. The Governor created a new workforce development scholarship fund and the House dedicated the funds to existing need-based aid programs. The Senate took a different approach, dedicating the funds for KEES dual credit scholarships.

Workforce Development: The Governor included in his budget a $100 million bond pool for workforce development projects that would be invested in advanced manufacturing training projects with business and higher education partners. The House took those bond funds out and replaced them with their Work Ready scholarship program that would have provided free tuition at KCTCS community colleges. The Senate returned to the Governor’s approach, but only included $50 million in bonding.

In short, the Senate budget follows the Governor’s approach in most areas, but still made alterations to the Governor’s budget in several ways. The key negotiating points heading into the budget conference committee – where legislative leaders will hammer out a final compromise – seem to be: creation of a permanent fund for future pension spending; cuts to higher education; approaches to scholarships and workforce development.

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