KEPC UPDATE: School finance, property tax, STAR Bonds, rainy day fund, HPIP, eco devo, broadband task force

In this issue …

  • House committee begins work on school finance
  • Bill would require more property tax for education
  • STAR bonds changes suspended
  • Rainy day fund passes committee
  • HPIP changes pass committee
  • Eco devo review bill is out of committee
  • Broadband task force bill moves forward


House committee begins work on school finance

The House K-12 Education Budget Committee began work Thursday on a new school finance bill, despite not knowing how much money to put into the formula.  The bill is HB 2445.

The bill address equity issues identified by the Kansas Supreme Court; changes some Local Option Budget provisions currently in law; removes the minimum at-risk student weighting; and says the capital outlay fund can no longer be used for utilities or property and casualty insurance.

The committee ran out of time and will pick up their activity again next week.  At the same time, the Senate Education Finance Committee began work on some of the changes that the Kansas Supreme Court did not like.

Meanwhile, still trying to understand the school finance study commissioned by the legislature, lawmakers are now waiting for some cost estimates from the Kansas Department of Education.

Texas A & M professor Dr. Lori Taylor was hired to conduct the cost study.  Dr. Jesse Levin of the American Institutes for Research was hired to was do a peer review of Taylor’s study.  They both appeared before lawmakers on Monday to discuss the findings.

A first look seems to indicate it will take between $600 million and $2.1 billion to satisfy the Kansas Supreme Court, which has ruled the current funding formula unconstitutional.

The study says that, on average, for every one percent increase in the graduation rate, school funding needs to increase 1.5 percent.  This reinforces the argument by education supporters who have said for many years that money matters in educational outcomes.

It appears the state needs to agree on what levels of performance it must set before it can agree on a funding level.

The next step is to come up with school finance runs that show what each district would get at different levels of funding.

According to a March 20 story in the publication  Hawver’s  Capitol Report:

“Senate Majority Leader Jim Denning, R-Overland Park, said it might be Friday  before lawmakers receive the cost estimates in the study by former Kansan and now Texas A&M researcher Dr. Lori Taylor in a form that can be converted into the ‘runs’ that are the heart of Kansas school finance legislation.  Those runs show how much money each school district will receive from a school funding formula.”

“Nothing firm, but it looks like sometime next week to marry the Taylor information to actual school district enrollments and makeup of districts and even individual school buildings to come up with a formula-influenced or not by the new study – and figure out weightings for students who have learning handicaps, live in poverty or aren’t English language speakers.”

Here’s a link to the updated Taylor study.


Bill would require more property tax for education

Meanwhile, the Senate Education Finance Committee has been looking at a possible revenue source to help pay for new school spending.  The Committee held a hearing Tuesday on SB 422, which requires more property tax for education.

Under current law, school boards are allowed to set the Local Option Budget (LOB) at  maximum of 33 percent of their general fund budget.  SB 422 would require school districts to set their LOB at 30 percent of the general fund budget.

The bill also requires local school districts to allocate the LOB to at-risk programs in proportion to how much of their state aid goes to their at risk fund.

The committee has not taken any action on the bill as of this writing.


STAR bonds changes suspended

The Senate Commerce Committee has run out of time and has suspended discussion of any changes to STAR bonds.  Local governments and economic development officials did not like the proposal, saying it essentially would kill the ability to use STAR bonds in most cases.

It’s unclear if and when the issue will come up again.

STAR bonds are sales tax revenue bonds that provide Kansas municipalities the opportunity to issue bonds to finance the development of major commercial, entertainment, and tourism areas.  The sales tax revenue generated by the development are then used to pay off the bonds.


Rainy day fund passes committee

The Ways and Means Committee of the Kansas Senate has given approval to a bill creating a budget stabilization/rainy day fund.  The fund would use money coming to the state when personal income taxes exceed certain revenue estimates.

Many states have a rainy day fund to help with violent swings in state revenues.

The measure, HB 2419, has already passed the Kansas House.  It now goes to the full Senate for debate.

The bill now declares that excess revenues would go 50 percent to the rainy day fund and 50 percent toward the Kansas Public Employees Retirement System (KPERS) unfunded liability.

The bill requires the Director of the Budget to consult with Legislative Research to certify the average estimated tax receipts from the three previous fiscal years.  The amount transferred to the fund is the excess of the average for the three years.  But the transfer cannot take place if the revenues are lower than the immediately preceding fiscal year.

The bill appears to say that the rainy day fund cannot be greater than eight percent of the preceding year’s state general fund receipts.


HPIP changes pass committee

Tax credits available through the Kansas HPIP (High Performance Incentive Program) would be extended to 25 years under Senate Bill 430, which came out of the Senate Ways and Means Committee this week.

Lawmakers have been concerned for several years that a large number of unclaimed credits that are allowed to be carried forward might be used by businesses in one year, leading to severe budget problems.

Senate Bill 430 reduces the HPIP credits that are unused from 16 to 25 years for those taxpayers who claimed a credit prior to January 1, 2018.

After the 16th year, the amount of tax credits used is limited to ten percent of the reduced amount.

HPIP provides a ten percent nonrefundable income tax credit for eligible capital investments that exceed either $50,000 in non-metropolitan counties, or one million in the five metro counties of Douglas, Johnson, Sedgwick, Shawnee, and Wyandotte.


Eco devo review bill is out of committee

A committee to review and evaluate economic development programs of the state is created by Senate Bill 448, which moved out of the Senate Commerce Committee on Wednesday.

The Joint Economic Development Incentive Review Committee would be required to develop an inventory of all Kansas economic development incentives, to be updated annually.  Incentives are to be evaluated at least once every five years by the Legislative Post Auditor and a public hearing would be required on the Post Auditor’s evaluations.


Broadband task force bill moves forward

Access to broadband, especially in rural areas, has been a growing hot issue for Kansas lawmakers and communities.  In order to get a handle on needs and how to pay for them, House Bill 2701 establishes the Broadband Expansion Plan Task Force.

It passed the Senate Utilities Committee this week.  It had previous passed the Kansas House of Representatives 117 to zero.

The Senate Committee made several amendments to the bill before passing it:

  • The Task Force would look at access to public right of way for setting up broadband in an area
  • The Task Force would also look at price caps for broadband service providers
  • Also to be considered, developing criteria for a statewide broadband map; and involving the aerospace industry as well as the Farm Bureau.
  • A wireless carrier would be included in the task force membership
  • Kansas municipal utilities would be included in the membership
  • A final report would be due in January of 2020 with a status report to the legislature in January of 2019


Bill tracking

Here’s our latest bill tracking on measures we think are of interest to our readers.  All of these bills are held over from 2017.  As new bills of interest are introduced, I will add them to the list.

You should be able to click on the bill number and be taken to the Kansas Legislature’s web site page for that particular bill.  You will be able to see all actions taken, read the bill, and read any supplemental notes (layman’s descriptions) and fiscal notes (how much does the bill cost the state) that have been prepared.