Special Education in FY 2011 Budget

The Kansas Legislature is debating the funding of the state's special education needs for FY 2011 and beyond. Recent developments are highlighted below, and I encourage you to follow the latest developments in the Appropriations Committee and in my legislative updates.

• The FY11 budget as passed during the 2010 Legislature is not projected to meet the state’s special education maintenance of effort. It is estimated that approximately $16-$17 million in additional funds will be needed to do so. Basically, this MOE can be described as keeping special education funding at a percentage basis of total SGF (or not being cut more severely than total SGF). The Governor’s Budget Report for FY12 is projected to meet the special education MOE.
  

• We won’t actually know whether or not we’ve met our MOE until the end of the fiscal year because it’s measured off of actual numbers. Therefore, we don’t know exactly how much we’ll need to meet the MOE until it’s too late. The amendments that were considered in Appropriations and Ways and Means contained estimates as to what might be required. Both used the mechanism of reducing the lapse by the amount of $16.7 million and transferring the savings to special education in FY11.

• Here are some considerations:

• By shrinking the lapse to meet the special education MOE, base aid per pupil decreases in FY12.

• By shrinking the lapse, the ending balance in FY11 is reduced by the amount of decrease. In the case of shrinking the lapse by $16.7 million, the ending balance of the House freeze bill would be a little more than $20 million. The FY12 ending balance is unaffected.

• A $20 million ending balance leaves us dangerously close to the possibility of cash flow problems in June because of the effect on state revenues from the federal government’s bonus depreciation program and other potential revenue problems.

• If we don’t meet maintenance of effort in FY11, there is the likelihood of a fine from the federal government in FY13. While the amount of the fine is unknown, it could be dollar for dollar or higher.

• The State of Kansas is being fined in FY12 for not meeting the special education MOE in FY10.