The Session is Over, But the Court Must Still Rule

Jun 12, 2017 by

The 2017 Legislative session came to a close on Saturday night with the adoption by both chambers of the final budget conference committee report. There was little specific to public schools in the budget as the K-12 budget is contained in the school finance plan passed earlier (SB 19).

The worst bit of news in the budget bill is that the conferees did not agree to any provision to pay back the money deferred from KPERS. While this action does not jeopardize KPERS retiree benefits, it undoes some of the work done over the past few years to bring KPERS back into fiscal health by reducing the unfunded actuarial liability.

As we look at the work of the 2017 Legislature, it is a good exercise to measure that work against our own KNEA Legislative Agenda.

There are four components to the KNEA Legislative agenda: Taxation, School Finance, Support for Educators, and Advocating a Bright Future for All Kansans.

In the area of Taxation, under income tax we scored a major victory with the passage of SB 30 and subsequent veto override. Every goal we stated under income tax was achieved. The “march to zero” or “glide path” was repealed as was the LLC income tax loophole. The income tax has been restored as the foundation of a balanced tax system, and a new higher income tax bracket was added restoring progressivity to the system.

Our positions on sales tax (lowering the food rate and dealing with sales tax exemptions) while not achieved were included in bills and amendments to bills and all had hearings during the session. Sales tax exemptions on some services were even voted upon. We can report that progress has been made in addressing important sales tax issues.

We also support the repeal of property tax caps on local units of government, an issue that was not resolved this year.

Finally, we support a full repeal of the corporate tuition tax credit program. While this did not happen this year, we had one success as well as one loss in this program. All schools receiving scholarship students must be accredited (for the win) but the credit is now available to individuals (for the loss).

In the area of School Finance, the passage of SB 19 assures that the unconstitutional block grant system is now history. Senate bill 19, for the most part, meets the criteria for a formula that we included in our legislative agenda.While the new formula does not fully fund the excess costs of special education, it does provide additional special education funding. We are especially pleased that it funds all-day kindergarten and provides some funding for pre-school programs. And fortunately, other pre-K programs were protected with the decision to reject the securitization of the tobacco settlement money which funds those programs today.

SB 19 provides two years of funding increases to public education which must be tested by the Supreme Court for adequacy. We do not believe the funding to be adequate to the challenge of Gannon and will be anxiously awaiting the Supreme Court review.

In the area of Support for Educators, we are happy to report that for the first time in many years, there were no attacks on the teaching profession debated in this session! That in and of itself is a major victory and it is in large part thanks to the work KNEA members did in supporting the election of more moderate Republicans and Democrats to the legislature.

Our only loss in this area was the decision to not repay the funds deferred from KPERS. And while we did not manage to get due process protections restored, we did get the restoration through the House with a very strong bipartisan vote. Unfortunately, the Senate never took the issue up and our last chance was an amendment to the school finance bill brought by Rep. Jerry Stogsdill (D-Prairie Village) that was ruled to be not germane to the bill and so was not considered. The votes in the House this year give us hope for the future.

In the area of Advocating a Bright Future for All Kansans, we must report that while we have not won on our issues, we have not lost ground either.

We were delighted to see the expansion of Medicaid pass both chambers and then disheartened with the Governor’s decision to veto it. We are sorry that the Legislature was unable to muster enough votes to override the veto.

Worst of all, despite the best efforts of many legislators, parents, faculty, students, and organizations including KNEA, the Legislature bowed to the NRA and refused to restore control of firearms to our Kansas colleges and universities. Beginning on July 1, 2017, our colleges and universities must either provide metal detectors and security personnel at all entrances or allow anyone to carry a concealed firearm anywhere on campus. Despite overwhelming support from the communities, NRA money and threats continue to carry the day.

So all-in-all, when examined in light of the KNEA Legislative Agenda, this was a very good session for public schools and public school teachers.

So, It’s Over But It’s Not Over…

As we write this today, Governor Brownback has SB 19, the school finance bill, on his desk. What we don’t know is his plan for that bill. Will he sign it? Will he veto it? Will he just let it sit there for ten days until it becomes law without his signature?

Our frustration is that every day that passes is a day less the Supreme Court has for review before the June 30 deadline.

If he vetoes the bill, the Legislature will have an opportunity on June 26 during their ceremonial sine die closing to consider an override vote but by then we are only four days from the deadline.

We are working with KNEA Legal staff to examine the various scenarios that could play out depending on a signature or a veto, an adverse court ruling or a special legislative session. Stay tuned for further KNEA reports as things play out.

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School Finance, Tax Reform, & a Veto Pen

Jun 6, 2017 by

Tell your legislators to override the Governor’s veto of CCR for SB 30!

School Finance Passes on Second Try

Yesterday saw the consideration of two school finance plans. The first was created from the conference committee work on HB 2168. The House put tax policy in the bill. Three provisions were included: the establishment of three income tax brackets, the repeal of the glide path to zero, and the repeal of the LLC loophole. Additionally, the bill would direct all state income tax receipts to K-12 education in Kansas. Under this, all other state services would have to be funded with sales and excise taxes and fees.

This bill also required a “trailer bill” (CCR SB 30) that included other tax provisions many of which lowered the income tax receipts possible under the change in brackets. The revenue raised in the bill was lower than other tax bills considered this year.

KNEA, along with other education organizations, opposed the bill (contained now in CCR SB 19). This bill failed on a vote of 32-91 and was sent back to the conference committee. Since the tax trailer bill was tethered to the school finance bill through a provision that assured if one of the bills failed, they both failed, there was no need to then vote on the trailer bill.

Back in the education conference committee, the income tax changes were stripped out of CCR SB 19 and it was sent back to the floor as a school finance bill only. With the tax policy stripped out, the report was adopted in the House on a vote of 67 to 55 and later in the Senate on a vote of 23 to 17.

KNEA believes that the education finance bill that passed is not likely to meet constitutional muster because the funding is not adequate and because there are several provisions which may be considered by the court to be disequalizing. Additionally, the bill expands the tuition tax credit program diverting state money to private schools. We know that many legislators voted against the bill for these reasons; others voted against it because they have no interest in increasing funding for schools. We also know that many legislators who agree with us on the above issues also voted for the bill because they firmly believe at this late date something must be sent to the court for review. They are counting on a court ruling to move more legislators to support a better plan perhaps in a July special session.

Tax Bill Finally Passes; Governor Vows to Veto

After the failure of the tax/school combo bill, the tax conference committee met and assembled a new tax plan (again in CCR SB 30) that restored the three income tax brackets at higher levels than now but lower than 2012, repealed the glide path and the LLC loophole, and phased back in to law some of the family-friendly deductions (medical care, property taxes paid, mortgage interest, child care) over several years. This bill raised significant new revenue – about $600 million per year – and helped Kansas families. KNEA, AFT, Kansas Action for Children, the Kansas Organization of State Employees, the Kansas Center for Economic Growth, and other allies in Rise Up Kansas threw their support behind the tax bill.

The stand-alone tax bill (CCR SB 30) was ultimately adopted by the House on a vote of 69 to 52 and then by the Senate after midnight on a vote of 26 to 14. We were delighted that a good tax plan was finally adopted but of course, there is still one more hurdle – the intransigence of the man on the second floor.

It wasn’t long before Governor Brownback let it be known that he would veto CCR SB 30. We expected this. After all, Brownback has invested much of his tenure in destroying the tax basis of Kansas, starting with the reckless and irresponsible tax cuts of 2012.

Legislators and Kansas voters know it is time to get the state’s fiscal house in order. In August and November of last year, voters threw out many of the most vocal supporters of the Brownback experiment, replacing them with moderate Republicans and Democrats. Despite Brownback’s lame duck status and persistent rumors of his pending appointment to a position in the Trump administration, he vows to leave the state in fiscal collapse. And sadly, it appears that some in the Legislature are okay with that.

At this time, after six years of falling revenue, after 19 rounds of cuts to state services from universities to K-12 education to public safety, roads and highways, and the social service safety net; after multiple credit downgrades; after putting the state in massive debt through bonding and skipping payments to KPERS, it is time to turn this ship around. It is time to get on the path to fiscal stability.

The Kansas House and Senate must stand up and override the Governor’s veto of CCR SB 30. If they do not, they risk the closure of public schools on July 1.

We need every Kansan who cares, to contact their Representatives and Senators and call upon them to override the Governor’s veto of CCR SB 30.

You can tell your legislator that you want them to override the Governor’s veto easily here.
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Week Four Begins

May 22, 2017 by

Both chambers were on the floor at 10:00 this morning for very brief meetings before recessing until late afternoon.

The House this morning did adopt the conference committee report (CCR) on SB 21, the KPERS working after retirement changes that we reported here on May 17 (CLICK HERE).  The Senate will likely vote on the report late today or tomorrow.

We made sure we had seats for the noon meeting of House/Senate Conference Committee on Taxes. Word was that they were close to agreeing on some changes to the CCR on SB 30. This was a plan that was not run earlier when it was found that they did not have the votes to pass it.

SB 30 would enact some very good policy changes that are widely supported. It would restore three income tax brackets somewhat higher than they are now, it would end the Brownback glide path to zero, and it would repeal the LLC business income tax loophole. Passage would restore common sense tax policy to the Kansas income tax and set the path on the right path going forward but unfortunately would not raise enough revenue to provide for significant school funding increases to meet Gannon. If SB 30 were to be adopted, a second bill would be required to fund K-21 education.

The conference committee did convene at noon but only to say they weren’t yet prepared and then agreed to return at 2:30. At a later meeting, they did agree to send the report to the House floor in SB 30. The Rise Up Coalition, of which KNEA is a member, supports this bill. It is the first step in saving Kansas from the Brownback experiment.

The House was scheduled to reconvene at 7:00 tonight and we are now waiting for the vote. If it passes the House, it may go to the Senate late tonight.

Major Opposition to Denning’s Utility Surcharge Likely to Lead to Changes

Senator Jim Denning (R-Overland Park) included an education “pay for” in SB 251, his school finance overhaul. Denning proposed a surcharge of $2.25/month/utility for residential customers; $10/month/utility for business customers; and a $120 annual fee for agricultural irrigation. Needless to say, there was heavy opposition from agricultural interests and utility companies. Word today was that there would be consideration of changing from a surcharge to a sales tax on utilities such that the more gas or electricity or water one uses, the more one will pay in taxes.

Look for a follow-up report late tonight or tomorrow morning!

 

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Senate School Finance Bill Comes Together; Taxes Not So Much

May 18, 2017 by

Senate President Susan Wagle with Governor Brownback

The Senate Select Committee on Education Finance has been holding committee meetings lately to talk about what the House has done so far on an education finance bill. The House bill, Sub for HB 2410, is sitting in limbo, not yet scheduled for debate on the House floor so, in reality, the final House bill is not done. When it does finally reach the floor it will be subject to amendments and most people feel that it very likely to be amended.

So we found it interesting that the Senate Committee, chaired by Sen. Jim Denning (R-Shawnee), scheduled hearings on Sub for HB 2410 starting today. This left many of us in a bit of confusion. Denning has been announcing his ideas on school finance – or at least on adjustments to HB 2410 – that will make up a Senate position.

While we (KNEA) wrote our testimony purely on HB 2410 as it came out of the House Committee, we did get a quick look at Denning’s bill (SB 251) and listened to the revisor’s explanation which allowed us to speak to the differences between it and HB 2410.

Senate Bill 251 started with the House bill and made a few adjustments.

  • They kept the at-risk weighting at the lower weight (.454) instead of the .481 in the House bill (KNEA supports the House position),
  • keep the first year base foundation aid at $4006 but then apply a formula to determine the second year based roughly on the successful schools model used in a prior study and set the second year base at $4080 (KNEA believes the original House version prior to the Monday changes is the best of the options proposed),
  • beginning in the third year they propose a formula to raise base funding through a rolling 3-year average of the CPI-U rather than the actual CPI-U as in the House version (KNEA supports an inflation measure going forward and will have to study this proposal more closely),
  • eliminate the mandate for ABA therapy for children with autism (KNEA supports the Senate position), and
  • eliminate the local enhancement fund for schools with the least at-risk students (KNEA supports the Senate position).

Both bills provide for all-day kindergarten, mentor teacher program funding, and professional development funding (KNEA supports all three).

What might be Denning’s most troubling idea is to fund schools through a surcharge on utilities. He proposes putting a $2.25/month charge on all three residential utility bills (gas, electric, and water) and a $10/month charge on those bills for businesses. Every Kansan would pay an additional $6.75/month for utilities to fund a school finance increase. There are other parts to this as well such as a $120 annual charge on farmers who irrigate.

This proposal has already come under widespread disapproval as regressive and unfair. It’s hard to see much support for the idea in either chamber.

Testifying on the bill today were Olathe Schools, City of Olathe, Pratt Schools, Bonner Springs Schools, KASB, Insight Virtual Schools, The Alliance for Childhood Education, Kansas Policy Institute, and of course KNEA.

The hearing will continue tomorrow morning. All testimony is expected to be finished tomorrow and Chairman Denning suggested he might begin working the bill tomorrow. He has also suggested that they may work on Saturday.

No Agreement on Taxes

The Tax Conference Committee met this evening we had hoped that they would produce an agreement on the House proposal to simply repeal the 2012 Brownback tax disaster.

At issue was which chamber would run the proposal first. When the Senate conferees said they would not entertain the idea of both chambers running it simultaneously, the conference committee ended without agreement.

And so we go back to waiting. We’ll see what shakes out tomorrow.

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SPECIAL EDITION: Repeal and Replace, Kansas Style

May 16, 2017 by

Late yesterday at a meeting of the House/Senate Tax Conference Committee, House Chairman Steven Johnson (R-Assaria) proposed a complete repeal of the 2012 Brownback tax disaster, replacing it with the Kansas tax system prior to 2012.

Quite frankly, this is the best thing the legislature could do. With a full repeal, the billion dollar holes created by Brownback’s failed experiment would be filled and the state would have enough revenue to begin maintaining roads and highways again, provide for public safety services, restore the social service safety net, and meet their constitutional obligation to fund education. You might remember that in the early rulings on school finance in the Gannon case, the court specifically said that the state had enough money to fund schools but that the Governor and legislature chose to give that money away in the 2012 tax cuts.

Full repeal would immediately do three things that we believe are critical to any tax and revenue solution.

  • It would restore the third income tax bracket on higher earnings,
  • repeal the “glide path to zero” that would completely eliminate income taxes, and
  • return the more than 300,000 business owners to the tax rolls.

Whatever tax plan is ultimately adopted absolutely must contain these three provisions. There simply is no other way out of the Brownback mess.

This repeal proposal may come to a vote as early as this afternoon. We don’t know if this plan will pass; it is the largest tax plan proposed yet this year and it is likely that legislators will seek a compromise that preserves some portion of the individual income tax rate cuts. We believe that going forward no plan should ignore the three critical issues we listed above – at least three brackets, end the glide path to zero, and repeal the income tax exemption for business owners.

Also under consideration must be the school funding plan to meet the Gannon decision. The plan passed out of committee yesterday we believe to be completely inadequate and, if adopted, would be rejected by the Court. While the State Board of Education has called for nearly $900 million in new funding, Sub for HB 2410 provides only $279 million. Structurally, the formula in Sub for HB 2410 is sound but the funding is nowhere near what is required.

We are hopeful that members of the House will restore this bill to at least what it was as of last Friday – before the conservatives took over the Committee process and gutted the funding.

Legislators need to keep in mind that their job right now is to restore the state to fiscal stability by passing a responsible tax plan that repeals the most damaging parts of the Brownback tax failure AND to pass a school finance formula that is both funded and constitutional. And the two cannot be considered independent of each other. A failure to pass a robust tax plan will limit the opportunity to fund schools in a way that meets constitutional muster.

 

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