TOPEKA — Kansas lawmakers must fully fund K-12 public schools and pump an additional $106 million into universities, or federal authorities will withhold education funding from the state.
Unless they don’t.
Gov. Laura Kelly’s budget director sent a dire warning to legislators Sunday night, on the eve of their votes to override the governor’s vetoes of a tax bundle and provisions of the budget. The budget director, Adam Proffitt, advised lawmakers of strings attached to the most recent federal relief packages designed to help the country recover from the pandemic.
The state needs to maintain spending levels for both K-12 and higher education, Proffitt wrote in the memo, or risk losing federal funding for both. In the budget passed last month, lawmakers partially restored steep cuts to higher education included in the budget Kelly proposed at the start of the session.
Based on Proffitt’s calculations, the state should allocate an extra $106 million for universities to ensure compliance with federal authorities. If the state applies for a waiver, that funding could be split into a pair of $53 million payments, now and next year.
“This recommendation is the best path forward for Kansas because it 1) greatly reduces the state’s exposure to risk of recoupment of future federal dollars, and 2) demonstrates the state’s commitment to fully funding education at all levels,” Proffitt wrote.
If the intent was to scare lawmakers into preserving a comfortable budget surplus, it didn’t work. Republicans eagerly defeated the Democratic governor’s vetoes of a tax cut bundle designed to funnel tens of millions of dollars to large corporations and some of the highest-earning individuals.
In a meeting Monday morning of Senate Republicans, concerns about losing federal aid were brushed aside by Senate President Ty Masterson and Sen. Caryn Tyson, a Parker Republican who led the charge for tax reform.
Tyson said she had been in contact with Kansas Attorney General Derek Schmidt, who plans to run for governor next year, and that he didn’t think the threat to withhold funding will hold up.
“I think it’s more political than accurate at this point,” Tyson said.
Masterson told the caucus there were varying opinions on how the “maintenance of effort” provision in federal funding applies to state spending. A possible solution posed by Masterson: Set money aside in escrow “just to cover our bases.”
In debate over the tax cuts, Democrats in the Senate rattled sabers at the absence of legislation funding K-12 public schools, the prospect of cutting taxes with a bleak financial outlook, and the threats outlined in Proffitt’s memo.
“Passing a bill with $300 million in tax credits while asking for help to fund our public education — I think they’re going to see through us,” said Senate Minority Leader Dinah Sykes.
Tyson pointed out the $300 million figure represented the cost of tax cuts over three years.
“For those of you that don’t know, I do have a math degree, and you can make it look however you want,” Tyson said.
Tyson also referenced healthy tax collections, a point bolstered Monday afternoon — hours after both chambers had restored tax cuts by overriding the governor’s veto — when the Kansas Department of Revenue released its report on April revenues. Even after revising expectations upward, the state collected $91.3 million more than expected. The single month’s surplus is nearly enough to cover a year’s worth of the tax cuts.
The revenue report also presents a stark contrast to last April, when much of the state was under a lockdown imposed by Kelly to blunt the spread of a deadly virus. Corporate income tax collections were up by 304.1% from year to year. Individual income tax collections were up 72.5%.