Published: January 06, 2010 11:42 am      

SEEK funding spared in 3 percent budget reduction

Jan. 6, 2009 — Maybe it’s good news when the news isn’t as bad as forecast.

On Monday, Gov. Steve Beshear announced a budget reduction order for the current year which cuts most state agencies’ funding by 3 percent and spares the basic school funding formula, Medicaid and higher education.

At one time, Beshear was anticipating as much as 6 percent cuts but the group of economists who estimate state revenues for the legislature this month reduced the estimated shortfall from $160 million to $100 million.

Elementary and secondary schools got even better news — local districts will get back between $30 and $40 million in excess SEEK funding during the last three months of the fiscal year which ends June 30. The formula is based on enrollment and attendance estimates at the first of the school year and then adjusted in February.

School districts will still receive 3 percent cuts in such non-SEEK programs as Read to Achieve, Math Achievement, and support services like textbook funds and insurance programs, but both Beshear and Education Commissioner Dr. Terry Holliday said the excess SEEK distribution should cover those cuts and similar cuts in last year’s budget for most districts.

“The goal is to keep priorities intact, to survive as best we can while we work to recover from this recession,” Beshear said. Those priorities are education, Medicaid, Kentucky State Police and higher education, he said. Also exempted from cuts were local jail support, prosecutors and public advocates.

Kentucky Education Association President Sharron Oxendine applauded Beshear for again exempting SEEK from cuts. But she said the other cuts affect education.

“We know anytime you cut supports services — those programs like extended school services, professional development and textbooks — anytime you don’t have money for those types of services, you hurt the classroom,” she said.

More ominous for school districts, however, was Beshear’s warning to “conserve your funds as much as possible. The challenges confronting us in the next two-year budget are formidable.”

The state faces as much as a $1.5 billion revenue shortfall in the next biennium and Beshear said again Monday he will “try every way humanly possible to preserve the SEEK formula in the next two-year budget. I can’t stand here right now and tell you that we will accomplish that. But that is my highest priority.”

He said he and his staff are continuing to work on the budget he must propose to the General Assembly later this month but he said he will not support “broad based tax increases.” Everything else, he said, is “on the table.” He said he hasn’t decided whether to try again to get the legislature to pass an expanded gambling measure.

He ruled out “significant layoffs” of state employees but otherwise provided few details of what he will propose for the next budget.

The $108 million budget reduction announced Monday covers the current year and is comprised of about $100 million in revenue shortfall and $8 million in increased Medicaid costs. To make up that amount Beshear uses $25 million in remaining federal stimulus funds; $33 million in one-time fund transfers, roughly $10 million each from the underground storage tank fund, the Department of Revenue and the Cabinet for Health and Family Services; and $49.9 million through the 3 percent cuts to state agencies.

The use of $25 million from the state budget stabilization portion of the federal stimulus reduces the remaining amount available to offset the shortfall in the upcoming budget from $293 million to $268 million.



RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.