LLC Loophole Repeal Is Just Step One

Jan 20, 2017 by

Post Highlights

  • Governor’s budget recommendations would fail special education maintenance of effort requirements resulting in loss of federal dollars to support those programs.
  • Motions by Representatives Rooker, Trimmer and Campbell were made to support full funding of KPERS.
  • KNEA supports repeal of LLC Loophole while recognizing that this is just one step in a much-needed comprehensive plan to create a fair and sensible tax code.
  • Brownback Secretary of Revenue, Sam Williams (former chair of Brownback’s K-12 Efficiency Task Force) promised to spend the weekend trying to discover why his own department’s fiscal notes were inaccurate- to the tune of hundreds of millions of dollars.
  • Kansas Policy Institute’s Dave Trabert came to the defense of the LLC loophole arguing that the state has more than enough revenue to provide for outstanding public services.
  • A federal report issues scathing criticism that Brownback’s KanCare program is “substantively out of compliance with federal law.”
  • House Education committee hears report from Kansas Commissioner of Education, Dr. Randy Watson regarding KansasCan campaign, state assessment changes and more.

House K-12 Budget Committee Considers Department of Ed, Schools for Deaf and Blind

After hearing budget appeals from the Kansas State Department of Education and the Schools for the Deaf and Blind yesterday, the committee today crafted their recommendations for the full Appropriations Committee.

It did not take long to come to an agreement. Notable in the testimony yesterday was the fact that the Governor’s recommendations, if enacted, would cause the state and the two special schools to miss special education maintenance of effort requirements and thus cause the state to lose federal special education dollars. One key to this problem is the Governor’s recommendation to freeze KPERS employer contributions at the 2016 level.

Under the Governor’s plan, the state would make KPERS contributions in 2017 and 2018 at the same level as 2016. In 2016, the state made only three of the four quarterly KPERS payments, instead using the last $96 million payment to patch the holes in the state budget. Governor Brownback has suggested reneging on a promise to pay the $96 million back with interest (total value is $115 million). The state is also required by statute to increase contributions annually to meet the actuarial requirements.

The Governor’s plan would mean that in 2017 and 2018 the state would not only ignore the statute on increasing contributions but would pay no more than was paid in 2016 entirely – this means another $96 million loss in 2017 and again in 2018.

Motions in committee from Representative Melissa Rooker (R-Leawood), Ed Trimmer (D-Winfield), and Larry Campbell (R-Olathe) that would recommend that the Appropriations Committee fully fund KPERS as per statute and ensure that special education maintenance of effort requirements be met.

Our thanks go out to Rooker, Trimmer, and Campbell as well as all the committee member who voted in favor of these motions.

House Tax Committee Hears Bill on LLC Repeal

The House Tax Committee today held a hearing on HB 2023, a bill that would repeal the so-called “LLC loophole” under which owners of businesses pay no state income tax at all.

KNEA supports the repeal of the LLC loophole but in this case, we testified as neutral. We believe that while the loophole must be repealed, it should be done within a comprehensive tax restructuring. The loophole only accounts for about 30% of the loss to the state treasury caused by the reckless Brownback tax policy.

Much more needs to be done in a comprehensive manner before Kansas is out of the woods.

We are suggesting that Legislators take a look at the Rise Up plan. It is currently the only plan out there that would actually move the state back to fiscal sanity by ending the “glide path to zero income taxes” and re-establishing fairness in the Kansas tax code.

Leading off in testimony last night was Secretary of Revenue Sam Williams. Williams held fast to the fantasy that the loophole was creating massive numbers of new jobs in Kansas and that Kansas was outperforming other states. The hottest time for Williams was when he was asked why the new fiscal note issued by the Department – the memo that indicates how much revenue would be raised if the loophole was repealed – was hundreds of millions of dollars below prior fiscal notes. Williams was unable to respond and told the committee he too was puzzled and would spend the weekend trying to find out why.

Former Representative Mark Hutton then appeared before the Committee to urge passage of the repeal. Hutton came to the committee as a businessman and former supporter of the LLC loophole. He is now a strong advocate of repeal as it has not resulted in any benefit but only contributed to the loss of revenue and collapse of the state budget. Hutton spent much of his time dismantling a misleading “report” authored by the Kansas Policy Institute (KPI).

Dave Trabert of the KPI made his first appearance of the session in defense of the LLC loophole. Trabert, as usual, insisted that the state had more than enough revenue to provide for outstanding state services. He acknowledged that it might be unfair that business owners don’t pay income tax while their lower-wage employees do but he was more than happy to accept that unfairness as long as there were other things in the tax code that were unfair. He suggested that KPERS employer contributions should be taxed and the Regent’s employees should have to pay taxes on their retirement benefits.

The committee members, with the exception of Rep. Ken Corbet (he is an LLC owner), appear to be ready to repeal the loophole. If they do, it would be a good first step in righting the ship. It would be wrong, however, to believe that this one step alone will do the job. It won’t.

Kansas needs a comprehensive tax restructuring if we are ever to reverse the Brownback disaster.

Brownback Handed Failing Grades on KanCare!

A scathing report has been uncovered that calls Gov. Brownback’s KanCare program which privatized Medicaid to be “substantively out of compliance with federal law.” Two letters to the Administration from the Centers for Medicare and Medicaid Services outlined numerous compliance issues with the program which has been highly touted by the Governor and Lieutenant Governor Colyer.

According to the Topeka Capitol-Journal, a “January 17 letter denied a request to extend a waiver – known as a section 1115 waiver — authorizing the KanCare program by a year, from the end of 2017 until the end of 2018. Kansas must formulate and implement a corrective action plan, CMS officials say.”

In typical fashion, Colyer called the letters a politically motivated attack on Governor Brownback by Obama. Yes, it’s Obama’s fault! One wonders what the excuse will be tomorrow!

Read the letters in the Topeka Capitol-Journal. http://cjonline.com/news/state-government/2017-01-19/lawmakers-furious-feel-blindsided-brownback-administration-over

House Ed Committee Hears from Dr. Watson

Dr. Randy Watson, Commissioner of Education, gave a presentation on the merits of the Kansas Department of Education campaign known as “Kansas Can.”  Citing aggregate data as well as results from the KSDE listening tour, Dr. Watson expressed to the committee a new focus on providing curriculum to students that fit within their interests and meets the needs of the future workforce. 

After his presentation, Dr. Watson stood for questions from the committee.  During this period, Representatives Crum and Stogsdill remarked that they’ve been hearing from educators and parents who are concerned about teacher shortages and the lack of respect the state has shown teachers over the last few years.  Several committee members agreed as did Dr. Watson.  KPERS stabilization, strong working conditions, and other teacher rights issues were raised as possible ways to make Kansas more attractive for teachers.  We agree too!

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Sex, Equity, Bonding, and Procurement…Lots Going On Under the Dome!

Mar 16, 2016 by

House Passes Over Sex Ed Bill for Today

HB 2199, the bill requiring that human sexuality education be offered only on an “opt-in” basis, was up for debate today on the House floor. After debating three other bills, a motion was made to rise and report meaning that the bill was not debated today. It remains on the calendar and is available for debate later.

Under current law, local school boards can make a determination whether to offer human sexuality education on an opt-in or opt-out basis depending on their own community. This bill would disallow the opt-out option.

There is general agreement that opt-in programs have lower participation than opt-out. Many worry that without human sexuality education, some students will not get age appropriate education. As a result, it is possible that there could be an increase in sexually transmitted diseases and teen pregnancies.

The bill went further in that it would prohibit a school district from exposing any child who had not opted in to the program to any program materials. This provision stemmed from a parent complaint in the Shawnee Mission School District. One child photographed a controversial poster in a classroom that was part of the adopted human sexuality program.

If passed as is, the district would have to ensure that no child who is not in the program cannot see any program materials. The district would have to ensure that, if a classroom is used for both human sexuality and another subject, no materials from the human sexuality program could be seen. Additionally, the district would have to find a way to keep students in the program from sharing anything from the program with others. This would be impossible to enforce.

KNEA opposes this bill and believes school districts and boards will make the appropriate decisions for their own communities.


Ways and Means Takes Up Masterson Equity Bill

The Senate Ways and Means Committee today held a hearing on SB 512, Senator Masterson’s (R-Andover) bill intended to address the equity ruling of the Kansas Supreme Court.

While the bill shares some similarities to the Ryckman bill (HB 2731) heard in the House yesterday, it differs in one pretty significant way. Both bills return to the equity formula provisions in place before passage of the block grant bill (SB 7) and both bills repeal the extraordinary needs fund in order to find some money for fix. But while the House Bill looks to spend an additional $23 million, the Senate Bill simply rearranges some existing school funding to bridge the gap between the $17 million from the extraordinary needs fund and the actual cost of restoring equity.

Dave Trabert of the Kansas Policy Institute expressed some support for the Senate Bill because it provides no additional funding to schools.

Problems with both bills are that 1) they eliminated the extraordinary needs fund which is the only place districts can go in the event of large changes in property values or student demographics/enrollment and 2) they create winners and losers, something that is especially problematic at a time when schools have been flat funded.

And while the block grant would allegedly let schools know what they would get in funding for its duration, they would actually cut funding to some districts. One also wonders what impact the elimination of the extraordinary needs fund would have on the adequacy case still pending in the Courts.

No action has been taken as of yet on either bill.


Bond & Interest Review Panel Bill in Senate

The bill creating the Bond and Interest Review Panel was taken up once again in the Senate Education Committee today. Senate Bill 356 as introduced was very similar to House Bill 2456, worked in the House Education Committee yesterday.

While the bill was up to be worked today in Committee, no action was yet taken. Senator Molly Baumgardner (R-Louisburg) has proposed an amendment to the bill changing the review panel structure which has been floating in committee since the bill was first debated. And today, Senator Vickie Schmidt (R-Topeka) has offered to amend the bill to match the changes made yesterday to HB 2456 with the Trimmer and Bradford amendments.

The Senate Committee will need to return to the bill later to determine which way to go.


Education Budget Committee Considers Procurement Restrictions for Schools

The House Education Budget Committee today is discussing HB 2729, a bill crafted based on a recommendation from the Alvarez and Marsal Efficiency Study.

The first section of the bill would require school districts to make purchases through the Department of Administration’s Procurement List. This list is agreements for bulk purchasing that saves the state money.

The bill provides a few exceptions the requirement:

  • Such items or services may be procured locally in an amount within 1% of total procurement cost of the amount the department is able to procure the same items or services;
  • such items or services may be procured through an education service center;
  • (such board of education determines in writing that such items have a material quality difference that would negatively impact student performance or outcomes as long as the secretary agrees with such determination in writing; or
  • prior to July 1, 2018, a contract for the procurement of such items or services in existence on July 1, 2016, is still in existence.

There is concern in school districts with a provision in section 2 that would make the above apply to the purchase of any services over $20,000. There are services that a district might purchase that cost over $20,000 such as attorney representation that, under current law, would be exempt from the standard bid procedure. Current law requires bidding and the selection of the lowest bid for “construction, reconstruction or remodeling or for the purchase of materials, goods or wares…” It specifically exempts services.

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Senate to Consider Bill Ending Teacher Representation This Week

Mar 13, 2016 by

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TAKE ACTION NOW! END ATTACKS ON PUBLIC EDUCATION AND EDUCATION PROFESSIONALS

Last week, Senator Julia Lynn, demonstrating her anti-teacher zealotry, railroaded a bill through the Commerce Committee that, if enacted as it came out of committee, would essentially end the ability of teachers to have representation in collective bargaining.

Senate Bill 469 would require that a teachers association would have to be recertified as the representative every three years by gaining more than 50% or all persons eligible to vote in a representation election. The ballot would be required to have as candidates the current representative, any other organization that sought recognition, and an option of “no representation.”

Under the required vote standard, an organization that received even 100% of the votes cast, could lose the election if only 49% of those eligible to vote did so. If this standard were to be applied to Kansas Senate elections, no member of the current Senate Commerce Committee would have been elected – even the two who ran unopposed!

Another section of the bill says that if the Department of Labor was unable to get to a vote in a district, the local representative would automatically be decertified and could not stand for a new election for a period of 36 months, leaving teachers in that district without a contract or representative for a three full years! The Department of Labor does not employ enough staff to manage the nearly 300 elections called for in the bill.

This bill was opposed in the hearing by the Kansas Association of School Boards, United School Administrators of Kansas, the Kansas School Superintendents Association, and Kansas NEA. Those who stood for the bill were the Kansas Policy Institute’s Dave Trabert, the Koch-founded Americans for Prosperity, and the Association of American Educators which is funded in large part by right wing foundations.

Lynn, after hearing from the anti-union proponents and before opponents were given a chance to speak, announced publicly that the bill would be passed out of committee and rushed to the full Senate. Lynn apparently does not like to be bothered by anyone whose thoughts conflict with hers.

True to her word, the bill was railroaded out of committee but not before Lynn had to deny a Democratic Senator an opportunity to offer an amendment and then cutting off KNEA General Counsel David Schauner in the middle of a response to a question from a committee member.

There are a number of things that disturb us about the handling of this bill.

One is the obvious lack of respect for dissenting opinions and willingness to ignore fundamental democratic principles demonstrated by Senator Lynn in her management of the committee and the issue.

The other is the bill itself whose sole purpose is to deny teachers – and only teachers – any voice in their working conditions, salaries, and benefits.

To weigh in on this bill with Senators before the debate in the full Senate, click here.

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Taxes, Bonds, and a Budget

Feb 10, 2016 by

Taxing Authority for Community/Tech Colleges?

The House Vision 2020 Committee today held a hearing on three bills that would raise taxes for Community Colleges and Technical Colleges.

House Bill 2568 would allow community colleges to levy a property tax of up to two mills for a five year period in counties where they have satellite campuses.

House Bill 2569 raises a five mill statewide property tax levy to provide for the educational building fund to support construction at community and technical colleges.

House Bill 2570 would allow technical colleges to levy a property tax of up to two mills for a five year period in their home counties.

Representative Rooker (R-Fairway) wondered why tax bills were being heard in this committee when the House has a standing Tax Committee. That’s a good question! It could be because leadership did not want the bills in the Tax Committee and the only way they would get talked about is if they were introduced in a committee made up of almost exclusively moderate Republicans and Democrats.

The bills were not worked today. Committee Chairman Larry Campbell (R-Olathe) said that he intended to work the bills unless Committee members told him they had no interest. We’ll watch and see what happens next week.


Senate Education Hears Bond and Interest Review Board Bill

Senate Bill 356 is the Senate’s version of House Bill 2486 with both bills establishing a board to review bond issues for school districts that get bond and interest state aid. The bills also limit such aid to areas in a project that are specifically for the direct instruction of students.

The bill was supported by Walt Chappell, Dave Trabert, and Mike O’Neal. KNEA spoke against the bill, telling the committee that facilities have a direct relationship to student learning and teacher morale. Additionally, KNEA asked the committee to not approach a new school finance formula piecemeal but instead put off this discussion until they gather to craft a comprehensive school finance plan.

No action was taken on the bill.


House Ed Cancelled Today: CC/TC Due Process Debate Scheduled

Due to the long budget debate on the House floor, the afternoon committees were cancelled. The Committee will meet tomorrow but we do not know what the agenda will be at this time.

Chairman Ron Highland (R-Wamego) did announce that the committee will work HB 2531, the bill stripping community college and technical college instructors of due process protections next Thursday, February 18.


Budget Debate On-Going; KPERS Issue Amended

The House began debate on SB 161, the budget bill, shortly after 11:00 am and it is still debating as we write.

The first amendments, both of which passed, were offered by Rep. Steven Johnson (R-Asaria), Chairman of the House Pensions Committee. Johnson’s first amendment would require that the state pay KPERS back in the first quarter of the next fiscal year with 8% interest. His second amendment would prohibit the Governor from applying allotments (mid-year cuts) to KPERS in the next fiscal year.

While both amendments improve the KPERS situation, they do not reverse it. The budget still uses KPERS payments to balance the budget on paper – a very bad precedent.

It will also require the appropriation of enough money to provide the reimbursement and the interest. It’s hard to imagine that being possible given the dire conditions of the state’s revenue stream. Thanks to the reckless and failed tax policy of Governor Brownback, the state continues to bleed revenue forcing the legislature to struggle just like they are today to balance the budget. Or at least to balance the budget on paper. This budget doesn’t solve any problems; it kicks the can down the road.

We will report tomorrow on the outcome of this budget debate.

 

Best quote in the floor debate today: “If Eisenhower were a member of this legislature, he could not get himself appointed chairman of the Vision 2020 Committee.”

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School Finance Committee meets for public hearing

Dec 16, 2015 by

The K-12 Student Success Committee met for a public input day today and allowed a few members of the public to weigh in on school finance.

You might wonder if the committee has any biases. Well, at the last meeting, they invited Dave Trabert of KPI to debate school finance with Mark Tallman of KASB. This week, they lined up a number of conferees giving the first conferee – anti-public education gadfly Walt Chappell – a full 45 minutes and then giving all other conferees only 10 minutes. This was by design. The printed agenda detailed how much time each conferee would get!

Chappell used his time to trash Kansas public schools as failing children and went on to suggest ways to save money – get rid of MTSS because it is useless, don’t enroll non-English speaking students (every other country requires language proficiency before a kid gets to school), and eliminate all athletic programs (go to club sports paid for by parents like other countries do).

He was followed by Kansas Tea Party leader Chris Brown who blasted school districts for building facilities and called upon the legislature to grant approval to individual projects before they could proceed.

Four superintendents (Mischel Miller, Vermillion; Justin Henry, Goddard; Richard Proffitt, Chanute, Destry Brown, Pittsburg) laid out the challenges school districts face in the 21st century while Principals Kim McCune (Douglass) and Thomas Barry (Leavenworth) talked about the challenges their teachers face every day and the ways they work to overcome those challenges. Every administrator did an excellent job of putting school finance in perspective for the committee.

Education advocates Mary Sinclair (Kansas PTA) and Devin Wilson (Game On) provided the parent’s perspective in the desire not just for adequate schools but for excellent schools for all children.

Topeka Resident Phillis Setchell asked that the committee enact school vouchers and require that all reading instruction be done through intensive phonics. She asserted that phonics is what made Ben Carson the great man he is today.

The Pastor of the God I AM House Church in Topeka spoke to the sources that were brought by conferees and announced that his source was superior to all other sources. His source needed vouchers and tax payments for homeschooling parents.

Trabert and Tallman were then called upon to answer any questions that were left hanging after the last committee meeting.

Rep. Ed Trimmer (D-Winfield) had 15 minutes on the agenda at his request. Trimmer announced that he simply had some issues that had not been addressed that he would like to have in the record and wanted the time to make his comments. When he was finished, there was a brief pause after which Chairman Highland asked Dave Trabert if he would like to rebut Trimmer.

This was unprecedented! When Committee members make comments, lobbyists are NEVER asked if they would like to rebut! Lobbyists are granted time for their testimony and questioned but once the hearing is over, that’s it. Trabert proceeded in this case to not just rebut but to enter into a lengthy debate with Trimmer. This was a debate that other committee Chairmen would have ended, calling it out of order but for some reason it was allowed to continue.

Once the debate ended, Chairman Highland announced that committee members were to email their suggestions and ideas to either him or Vice-Chairman Abrams. Highland and Abrams will then draft a report which will be reviewed and discussed at a meeting on January 5, 2016.

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