This week, legislators returned to Frankfort to conclude the last two days before the veto period begins. During the veto period, the Governor will consider legislation that passed the House and the Senate and either sign or issue a veto. If the Governor chooses to veto, the House and the Senate will have the opportunity to override the veto during the last two days of session on March 29 and 30.
Among the bills passed the last two days before the veto period, is HB 192, which serves as the Executive Branch budget and includes funding for the majority of the state’s programs, services, and agencies. For the past several months, we navigated the daunting task of crafting a mindful and responsible budget during the ongoing COVID-19 pandemic. In addition to crafting a common sense, responsible budget, we also managed how to replace state funds with federal funds to leverage every state dollar.
As I mentioned before, the budget is a daunting task, especially considering the issues brought to a forefront in the past year. With this budget, Kentucky has the opportunity to shift our state’s budget philosophy towards realizing a level of fiscal discipline, financial stewardship, and strategic investment that holds the potential to improve our quality of life without jeopardizing the values we hold strong. Our goal in this budget is to continue to help our state weather the effects of the COVID-19 pandemic while thoughtfully planning for the future.
A critical part of thoughtfully planning for the future is implementing strategic investment policies. We don’t want to create future debt by using one time money as an excuse to make long-term financial commitments. In the most recent stimulus, the federal government allocated approximately $2.4 billion of federal stimulus dollars to help Kentucky mitigate the COVID-19 pandemic’s impact on our state and its people. While it is tempting to look at these funds as an opportunity to increase pay for public employees as well as fund exciting new projects, making long-term commitments with one-time money is not responsible policy — especially when so many Kentuckians are unemployed or underemployed. Instead, our goal is to look at every federal dollar as a strategic opportunity to invest in strengthening our schools, businesses and workforce.
In the past year, $3.13 billion in federal money has been allocated for public education spending in Kentucky. The most recent stimulus package included $2 billion for public education spending to be used to fund remediation efforts for learning loss, personal protective equipment, student mental health support, and afterschool and summer learning programs.
The education fund accounts for 42% of the state general fund dollars, so just over $5 billion. This budget provides full SEEK employer match, including $1.05 million for the employer match for new mental health professionals, and it maintains SEEK funding at $4,000 per pupil. We also included a provision to require federal funds to be spent before state funds, as we plan to leverage every state dollar we can. We also fully funded teacher retirement benefits at the annually required contribution (ARC), which draws $1.15 billion of education funding. Lastly, we allocated $1 million in general fund monies for the Teacher Scholarship Program, which provides financial aid to Kentucky students pursuing teacher certification at participating Kentucky colleges.
As you know, hundreds of thousands of Kentuckians were forced to draw unemployment as a result of the closures in response to COVID-19. A year from the beginning of the pandemic, we are still faced with thousands of unsolved claims, and the realization of a pre-historic, antiquated unemployment system in desperate need of modernization. While the demand was unprecedented, this added yet another hurdle to the newly unemployed and their families. In this budget, we require the Office for Unemployment Insurance program to add 90 positions. This will help regionalize the effort to solve the remaining unemployment claims. We also allocated an additional $10.4 million for upgrades for the Unemployment Insurance System. From the beginning of the pandemic, we heard your frustration and your struggle, and this funding was a high-priority part of HB 192 and funding the longevity of Kentucky’s unemployment system.
As we continue to navigate the effects of the pandemic, it is pivotal that we are prepared for unexpected emergencies and future opportunities. That’s why we allocated $608.5 million to the rainy day fund budget reserve in fiscal year 2021. By doing this, we increased our operating reserve, or the number of days the state can function without outside money; from 4 days to 29 days. This operating reserve is important to increase Kentucky’s credit score, which has long been bogged down by a pension crisis.
The economic fallout is far from over and there is still a great deal of uncertainty with thousands still unemployed. While the December forecast issued by the Consensus Forecasting Group showed a small increase in tax receipts in this fiscal year, at least one member of the panel cautioned that the forecast is merely an educated guess, describing it as throwing darts at a dartboard. As stewards of the state’s resources, it is our sacred duty to ensure the money sent to Frankfort is managed wisely.
As always, am grateful to serve this district and our communities. If you are needing assistance or have any questions, I can be reached during the week from 8:30 a.m. until 4:30 p.m. (EST) through the toll-free message line at 1-800-372-7181. You can also contact me via e-mail at Richard.Heath@lrc.ky.gov. You can keep track of committee meetings and potential legislation through the Kentucky Legislature Home Page at legislature.ky.gov.