Garber: Statehouse report
This is the second in a series of articles which can be found on my Facebook page or last week’s newspaper. I ended my last report discussing from my perspective how the Fiscal Year 2012-13 tax reforms benefited the hardworking citizens of Kansas. I mentioned how sluggish the private sector job growth had been from the decade prior to the Brownback administration and said the tax cuts which were meant to improve economic growth, as well as start Kansas on the path to end income taxation. I will pick up where I left off.
Fiscal Years (FY) 2013-15 saw the largest drivers of the Kansas economy perform worse than ever in the history of our state. This poor performance had nothing to do with the tax cuts as many have said. The old saying “if you say something often enough, it will become truth” rang true in this case. The tax reform naysayers completely failed to mention the drastic downturn of the agriculture, oil and gas, and aeronautical sections of our economy.
Ask anyone who is involved in agriculture, and they will tell you how much the farmer lost in income during those years. The men and women employed in the oil and gas industry saw family income decrease more than 240 million dollars. On top of that, Boeing left Kansas and set up headquarters in North Carolina. Although every effort was made to keep them, it didn’t happen.
While the main drivers of our economy were in the tank, we still saw modest revenue increases. However, the three pieces of our budget (K-12 Education; School and State Kansas Public Employee Retirement System; and Medicaid caseloads), which account for most state expenditures, grew significantly, despite efforts to curb costs and provide some predictability. We were seeing unique economic challenges.
K-12 Education is the largest expenditure in the Kansas budget. By FY 2016, it consumed over $4 Billion, which accounts for nearly 50 percent of the state general fund. On top of that, the old funding formula was discarded in 2015. The block grant replaced the old formula and gave power back to local officials by allowing more discretion in the allocation and use of funds for individual needs. Funding silos, which restricted how funds could be used, were for the most part removed for local administrators to freely adjust their budgets to meet local needs. This block grant was only to last for two years while the legislature worked on a new formula that would address unique needs and better target students in each district. It would also ensure stable and predictable education fund for Kansas school districts.
The KPERS was rated the second worst funded public funded pension system in the United States. After the legislature enacted reforms in the 2012-15 sessions and dedicated additional funds, the KPERS system is making significant gains in national standings. This has come at a significant cost as we set out to make good on the promises made to thousands of Kansans. Putting KPERS on stable ground by reaching the actuarially 60 percent funded mark requires substantial resources and has put a strain on the Kansas budget.
Medicaid is the third major cost driver of the Kansas budget. Federal law requires mandatory spending for increased caseloads. Kansas has no discretion in how much is spent in this area. Increased Medicaid enrollment resulted in increased expenditures from the State General Fund and threatens the state’s fiscal health. Kansas has led the nation by shifting to a full managed care system, which curbs costs while still providing needed services.
I will continue this series next week. Until then, may the blessings of God be yours.
Randy Garber3 Posts
Randy Garber is the Kansas House 62nd District Representative. His first term was 2011. He currently is vice chair for the Utilities and Telecommunications Committee, and also sits on the following committees: Social Services Budget, Agriculture and Natural Resources Budget, Energy and Environment, and Telecommunications Study.