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Legislative Update October 2009

Previous Legislative Updates

News from state agencies presents tougher budget challenges
The House Appropriations Committee continued its study of state resources with meetings in Topeka on Oct. 12-13. Our committee heard reports from state agency leaders that make our work challenging as we aim to fund the Kansas budget while tax receipts are taking a nosedive.

The Kansas Legislative Research Department told the Appropriations Committee that FY2010 first-quarter state tax receipts are down 12 percent from the first quarter of last fiscal year (the state’s fiscal year begins July 1). The Kansas economy continues to show stress from high unemployment and reduced consumer spending.

A budget-cutting quandary
State legislators are faced with a tremendous challenge. In the 2009 legislative session, the budget was cut three times before Gov. Parkinson made additional cuts when we were not in session. If revenues continue to decline, additional cuts must be considered by the legislature.

By some estimates, the legislature will likely have to slash $100 million from the current year’s budget before even working on next year’s deficit — projected to be around $400 million.

Education budget considerations
The state education budget, which accounts for more than 50% of all state spending, demands scrutiny in these tough times. I am also on the Education committee, and we heard additional testimony this month from officials from the Kansas Dept. of Education, who asserted that school lunch programs were strained and teacher salaries were lagging. The Education Department also said that student performance on statewide tests continue to improve; however, this didn’t take into account a 24% dropout rate.

Since my first term in office, I have stressed the importance of reducing the dropout rate in Kansas. I will continue to address this in the upcoming legislative session because it is a key problem in Kansas education.

See how the dropout rate has a negative effect on the Kansas economy >>

Learn why 2008 Kansas dropouts will cost the state $2.6 billion >>

For those students continuing on to college, the situation remains grim for state funding. Higher education representatives requested a $16.4 million increase in funding in the upcoming budget. Much of this is the result of increased enrollment at community colleges and technical schools.

KPERS funding crisis
The House Appropriations Committee is reviewing a report from the University of Kansas about the long-term funding issues of the Kansas Public Employees Retirement System (KPERS).

Late last year, KPERS projected the gap between its income and expenses over the next 25 years at $8.3 billion. The recent collapse of financial markets has contributed to a significant decrease in the value of the KPERS portfolio. However, according to the report, the financial collapse was not the only factor for the KPERS funding crisis, as there are many issues with the defined-benefit pension system. The report recommends fundamental reform in the funding of KPERS, and the legislature will continue to study this issue in pursuit of a solution which benefits both the state and its employees.

Read the report about the KPERS funding crisis >>
This report details why the Kansas Public Employees Retirement System funding is jeopardized under current operating assumptions. It also suggests reasons why the system should transform from a defined-benefit arrangement to a defined-contribution arrangement (like the one used by the Kansas Board of Regents).