FRANKFORT — Democratic House leaders raised concerns Tuesday about a provision in the Senate’s version of the two-year state budget that they contend could cut funding for primary and secondary schools by nearly $100 million.
Republican Senate leaders said on Monday that their budget cut the main funding formula for schools by $25 million over two years instead of axing two school days, which the House had proposed in order to save $36 million a year.
However, the Senate’s budget mandates that the school year remain unchanged but doesn’t restore the $72 million the House saved by cutting the days.
House budget chairman Rick Rand, D-Bedford, said it appeared to be an “unfunded mandate that could add up to $97 million in cuts over the two years” for schools.
Senate leaders acknowledged Tuesday that there is less overall money in the main funding formula for schools in their version of the budget, but said they have allowed school districts to divert money for construction projects to make up for the loss.
Senate President David Williams, R-Burkesville, said the Senate’s plan is a more fair way to cut the main funding formula for schools, called Support Education Excellence in Kentucky, or SEEK. Once the Senate’s proposed cuts are understood by the House, Williams said he believes the two sides can come to an agreement.
“Under either budget, they were going to receive less SEEK money,” Williams said of schools. But the Senate plan allows schools to dip into other pots of money to make up for the cuts, he said.
Williams remained optimistic that the two chambers — who may begin negotiations on the budget as early as Wednesday — will reach a compromise on a budget. “I am very hopeful that we can do that,” Williams said.
The education cuts and the Senate’s deletion of a little less than $1 billion in projects proposed by the House are two likely sticking points.
The Senate passed its version of House Bill 290 — a two-year, $17.3 billion budget — on Tuesday. The House passed it’s $17.5 billion budget earlier this month.
House Speaker Greg Stumbo, D-Prestonsburg, said cutting the main funding formula for schools was a step backward. “That’s a terrible precedent I think,” Stumbo said.
However, many in the education community said the same thing about Stumbo’s plan to cut school days. Shortening the school year, they said, could jeopardize the state’s chances of receiving up to $200 million in competitive federal funding.
Education leaders weren’t sure what to make of the vague language in the Senate’s budget on Tuesday. Brad Hughes, a spokesman for the Kentucky School Boards Association, said many educators were still trying to determine exactly what the Senate had done to the K-12 budget.
Cutting SEEK while simultaneously mandating two unfunded school days creates problems, he said. Some school districts have healthy reserve accounts but poorer school districts do not.
“The concern is that this will be a problem with equity,” Hughes said. “There will be some districts that will be able to afford it without having to cut other things and there will be other districts that, if they have to find this money, we’ll have to lay off people, we’ll have to drop this program or that program in order to pay for those school days.”
Stumbo also reiterated on Tuesday that the Senate’s decision to cut nearly $1 billion in school, sewer and water projects that the House had proposed was a deal breaker. The House says its plan could create up to 25,000 jobs.
Fayette County had a slew of water and sewer projects in the House plan and $16 million for the renovation of the Reynolds Building — the art building on the University of Kentucky’s campus. Those projects are not included in the Senate’s budget.
Senate leaders, however, countered that the best way to stimulate the economy was to give tax breaks to private businesses, allowing them to hire more workers. In its budget, the Senate expanded a small business tax credit and restored bonding authority to the state’s economic development cabinet to help spur economic development.
The Senate’s plan includes cutting most agencies an extra 1.5 percent beyond the House’s proposed cut of about 2 percent. The Senate plan calls for an extra 1 percent cut in the second year of the budget.
The House budget did not cut several large programs, such as Medicaid, mental health and mental retardation services and the Kentucky State Police. But the Senate plan only exempts the state’s debt payments, the Department of Corrections and the Department of Revenue from cuts.
That means Medicaid, the state and federal health care program for the poor and disabled, would face an additional $26 million in cuts. But Rand said the program could lose about $100 million because the state receives $4 from the federal government for every dollar it pays into Medicaid.
Other changes made by the Senate include:
■ No additional funding for the Cabinet for Health and Family Services to restore previous cuts to some agencies, including $4 million to improve safety for the state’s social workers and $2 million to reduce the waiting list for senior meal programs.
■ Gov. Steve Beshear must make $86.8 million in unspecified cuts, up from $74.5 million proposed by the House and $33 million suggested by Beshear.
■ Restoring language that allows the Lexington-Fayette Urban County Government to borrow $129 million to replace Eastern State Hospital, which the state will then repay.
■ Cutting many projects sponsored by Rep. Jim Stewart, R-Salt Lick, the lone House Republican who voted for a key House revenue-raising measure.