Legislative Update No. 10

The last two weeks of session have been fast and hectic. The capital was limited to only essential personnel this week leaving few people in the halls except for legislators, staff and lobbyists. The legislature concluded its regular session late Thursday evening coming to agreement on a few critical issues: 

1. “Basic budget” – As the impacts of the Coronavirus begin to be felt in Kansas, most additional spending that had been planned to be added in conference committee between the House and the Senate was put off until omnibus in late April/May. The one that impacts higher education the most is a 2.5% pay increase for State workers. On the positive side, while it is reviewed at omnibus it is for ALL state workers including higher education whereas the Governor’s original budget did not include higher education. The legislature essentially gave higher education the Governor’s Recommended Budget which was $11,893,156. There was added to KDHE’s budget $50M to be appropriated to all state agencies to combat the spread of the Coronavirus. It was addressed in conference committee that higher education would be able to access those funds if needed. 
2. Below are some of the key items that were included in the adopted budget this week:
   • $11.9M increase to the base for the universities
   • $11.1M increase to 2-year colleges
   • $2.5M to the comp grant that would require a match from private funds
   • bonding approval, with KBOR approval first, for WSU to purchase flats and suites 
3.  Here are some of the key items that were put off to omnibus:
   • 2.5% pay increase for all state employees including university employees  
   • $10M addition to the base for universities 
   • $5M grants for WSU, and KSU 
   • $363K for FHSU military Education pathway 
   • $1.5M increase in 2020 and 2021 for Excel in CTE 
   • $1.75M increase for CTE capital outlay 
4.  Highway Plan – Since the end of the last session, the legislature has worked on a new ten-year highway plan. While it is a ten-year plan, it breaks the projects into two-year increments to provide some flexibility as projects are added and deleted. It does place priority on T-Works projects that were not completed from the last highway plan. The plan spends approximately $1B over the ten-year period and does factor in decreasing transfers from the highway fund to the SGF. Given the almost certain economic fallout from the spread of Corona, it’s possible those transfers will continue. 
5. Executive Emergency Powers – Last week, the Governor declared a state of emergency in order to free up agencies to address the spread of the virus. That culminated in her executive order to close K-12 schools for the rest of the year. That prompted the Senate to pass an amendment to renew her emergency powers limiting them to a potential restriction if the Legislative Coordinating Council (LCC) votes to nullify her action(s) up to three days after she announces that action. LCC is made up of legislative leadership without representation from the Governor’s office.  
6. Response to Coronavirus – The legislature last minute added $50M depending on approval of LCC to deal with financial impact of Coronavirus on State agencies. The budget will take a couple of weeks to be reviewed by the Governor, and then LCC will likely develop a process to handle request to deal with those impacts. 

Given the uncertain future of travel, it is very unclear if there will be a Veto Session in late May or April. Currently they are scheduled to return on April 27 and could come back as late as May 21 if the LCC determines that is necessary. If there is no Veto Session, the above amounts will be the only enhancements higher ed receives for FY21. We likely won’t know for at least a couple of weeks if that is the case. 

Legislative Update No. 9

The legislature returned after their turnaround break on Wednesday and worked through Thursday before adjourning on Friday. There wasn’t a great deal of meaningful work accomplished this week with the exception of some procedural budgetary matters. Included in those were the full Senate Ways and Means Committee recommendations for higher education. As a reminder, the sub-committee recommended the Governor’s budget which includes $11.9M for higher education 4-year institutions but also $2.5M for need-based aid (applied to the comprehensive grant) as well as an additional $12.5M for pay increases for state employees, $5M for WSU for creating the National Institute of Digital Transformation and Convergence Sciences, $5M for KSU for a research focus on global foods and approximately $130k for PSU for a dyslexia program to help K-12 teachers identify dyslexia in the classroom and provide them the appropriate resources. All of those are to be reviewed at omnibus which means added at the end of the session when the budget picture is a little clearer in terms of expenditures and revenues (potential surplus versus shortfalls). The full committee adopted the subcommittee’s recommendations but added an additional $300k for FHSU for a military articulation program to be reviewed at omnibus and an additional $2.5M for need-based aid that would require a $2:$1 match ($2 of private for every $1 of public funds).

 

Something not tied to the legislative session but that directly impacts the budget prospects for the future is the actual revenue receipts for February were announced. The state received $63.6M (tax and non-tax revenue) for the month of February. For a total year-to-date overview of revenue estimates, the state has brought in $154M above estimates for the year for taxes and an additional $174M in other receipts such as insurance premium fees and corporate franchise fees). The healthy state of revenue in Kansas makes the pressure on spending in the budget and passing tax cut legislation grow by virtue of the fact that it at least appears the State can afford it.

 

Next week look for pressure to continue to build on passing a tax bill of some kind, anxiety over the future of Medicaid expansion and the stalemate over the constitutional amendment to regulate abortion will all be issues that create consternation in the short-term heading to end of the regular session at the end of March.