“Each time we’ve had to fill budget holes, we have been guided by two goals – to take steps to make government as efficient and as lean as possible, and to protect as best we can the core services that offer help and hope to our people and represent important long term investments in Kentucky’s future: education, healthcare, economic development and public safety,” said Gov. Beshear.
In the sixth budget reduction the Governor has made since taking office, he announced a combination of spending cuts, fund transfers and one-time federal stimulus dollars to fill the current shortfall. Last month, the Consensus Forecasting Group (CFG) projected a $99.9 million shortfall in revenues for FY2010. And an additional $8.4 million shortfall in Medicaid funding must be addressed.
Because the CFG revised their estimates for FY10, reducing the revenue deficit from $160 million to $100 million, Gov. Beshear was able to lower cuts to impacted agencies from an expected six percent to three percent.
At the same time, he continued to protect all of the areas of government from cuts that were agreed upon in the first budget reduction this fiscal year during the special session in the summer, such as the SEEK formula for K-12 classrooms, Medicaid, student financial aid, state police and higher education, among others.
Gov. Beshear also signed an order modifying the Road Fund budget reduction executed earlier this year. The revised official revenue estimate for the Road Fund from the Consensus Forecasting Group in December was $58.1 million better than the previous estimate. The order modifies the reductions to the Highways program to reflect the changed revenue estimate, and increases funds to local governments.
Excess SEEK Funding
Gov. Beshear also announced that because of budget changes he made this summer, excess education funds appropriated through the SEEK formula (Support Education Excellence in Kentucky) will be returned directly to school districts. The final number will be calculated at the end of February, but Beshear estimated $30 to $40 million will be distributed to schools.
In years past, those dollars have been swept into the General Fund, but Gov. Beshear added language to the budget bill in the special session promising that any excess funds in the SEEK formula would be returned to the school districts.
Schools will see a three percent cut in non-SEEK funds in this budget reduction, but the excess SEEK funds will effectively offset those cuts for all school districts. Additionally, in most districts, the funds will fully offset the non-SEEK funding cuts made in June.
“While the non-SEEK portion of the Department of Education’s budget is included in the three percent cuts this fiscal year, it is estimated that in every school district the additional funds distributed to schools through the SEEK formula will more than offset the impact of those cuts,” Gov. Beshear said. “The bottom line - every district will see some budgetary relief, and many will be made whole.”
Cuts made to the non-SEEK portion of the Department of Education’s budget that impacts school districts will be offset at the district level by excess SEEK funds.
“This is good news for Kentucky’s school districts, which have endured some deep fiscal cuts over the past few years,” said Kentucky Education Commissioner Dr. Terry Holliday. “School administrators will still be looking for ways to operate more efficiently and effectively in FY10, but Gov. Beshear’s commitment to K-12 education means that they won’t struggle as much as previously projected.”
(This press release was submitted by the Office of Kentucky Governor Steve Beshear.)