News from the Capitol--February 22, 2016

The last weeks have been full of interesting news, mainly on the budget, and I want to give you an update as to where things stand.

You might recall that in 2015, we passed a two-year budget, lessening the amount of work we have to do in the intervening year. However, due to shifts in revenue and in order to meet a balanced budget as required in the Kansas Constitution, we have to pass adjustments – both in rescissions for this fiscal year and in adjustments for the next. That is what we’re working through presently.

One provision I like in the budget bill is that it gives the governor additional authority to make targeted spending reductions, rather than across the board cuts, if revenues fall and the ending balance remains below $100 million. This is an important reform, as the across-the-board method harms agencies who are performing efficiently. It makes more sense to allow the targeted form of cuts.

The budget also does fund core state responsibilities such as public safety and public health:

 

  • In the area of public safety, there has been real concern about the Department of Corrections and the Kansas Bureau of Investigation (KBI) being understaffed. The budget bill puts in $2.45 million to boost the pay of all uniformed corrections officers. The bill also gives the KBI the authority to spend already existing department funds to boost the pay of current employees to remain competitive within law enforcement.
  • In regards to public health, the bill adds $3 million to address staffing shortages and other issues at Osawatomie and Larned State Hospitals that treat severely mentally ill patients. There are also several provisions addressing rural health care concerns. This includes restoring $378,000 for safety net clinics, which provide important healthcare options for rural and low-income patients. Also, the bill authorizes student loan repayment for pharmacists to work in rural areas where there may not be free-standing pharmacies. This is paid for out of federal dollars.

The budget also protects KPERS, a concern many have had in the past. The budget protects KPERS from across the board cuts, which the governor is allowed to do if the state bank account goes below $100 million. Instead, it gives the governor permission to delay a state payment to KPERS in FY 16, if revenues do not come in as expected. However, any delayed state payment would have to be made in the first three months of the FY 17, plus 8 percent interest. The KPERS payment in FY 17 cannot be allotted. KPERS Director Alan Conroy stated these changes would not have an actuarial impact on the pension plan. The bill does not affect payments made to KPERS retirees. Additionally, a floor amendment required 80 percent of the profits from the sale of surplus state property to continue to go towards paying KPERS’ unfunded liability, instead of those profits going to the state general fund.

It’s important to remember how much progress we’ve made on KPERS in the past few sessions. four years ago, KPERS was only 56.4 percent funded. A key factor was the employer contribution since 2004 averaged only $224.4 million per year. Now because Republicans have made it a priority to put the system back onto solid footing, KPERS is 67 percent funded and the average employer contribution since 2012 has been over $387 million per year. KPERS is out of the bankruptcy zone because of those investments to ensure solvency, and that commitment to funding public employee retirements will continue.

The budget ended up passing the House and I voted yes. Now it heads to the Senate, who passed its own version last week, as well. As the budget negotiations with the Senate’s version, I look forward to providing you further updates on what the compromise budget ultimately looks like.

Gannon Case
You probably have also read that the Kansas Supreme Court has yet again proved how badly we need judicial reform. In a political decision, last Friday, right in the middle of the budget discussions, the court issued its latest missive in the Gannon case, ruling that the block grants legislation we passed last year does not meet their test of equity and thus was unconstitutional.

What is strikingly odd about this decision is that just two years ago, the court praised the legislature when it added $126 million in funding to the old formula. None of that funding has been removed, yet because are allocating it in a way that is fair and without strings, the court has decided to issue this ruling.

Let me make one thing clear – we are not going to revive the old failed formula which put us in the cycle of litigation in the first place. It was destructive to schools, particularly those here in Johnson County. It provided no flexibility and limited local control in a way that goes against everything we believe in in terms where the control should lie.

My personal belief is that any acquiescence to the court in this regard would be a mistake. However, the court is threatening to close schools this summer if their demands are not met, and such a threat – particularly in an election year – is something that may cause some to wobble.

The legislature must not relinquish its authority under the Kansas Constitution to a court whose authority by design is limited in this regard. It is my hope that this also demonstrates, even further, the need for judicial reform, which I have discussed at length in previous newsletters.

Moving Forward
This week is Turnaround, the halfway point in the session where bills in one chamber have to be adopted to be voted on in the other chamber. So look for a lot of floor votes upcoming. This past week, we adopted some strong legislation in the area of small business and limited government, including removing restrictions on wineries and breweries. This will help grow jobs, expand small business, while getting government further out of the way.

If you have any questions about the budget, Gannon, or any of the other legislation we’ve discussed, please don’t hesitate to ask.