State approves certificates of indebtedness; no school finance cuts in Gov. Kelly’s draft allotment plan; budget fights loom

Kansas’ elected leaders Friday approved a $900 million inter-governmental loan after a fiery discussion that portends deep divisions on solving the state’s budget problems brought on by the COVID-19 pandemic.

Gov. Laura Kelly sought approval of the certificates of indebtedness to manage cash flow as the state enters a new fiscal year Wednesday.

In a meeting of the State Finance Council, Kelly also unveiled a draft allotment plan to bridge a dramatic revenue decline. That plan focused on some cuts and budget maneuvers but did not touch school finance.

On Thursday, Republican legislative leaders on the Finance Council sought to delay approval of the certificates of indebtedness, saying they wanted to study further the allotment plan.

After the meeting, Kelly, a Democrat, issued a news release accusing the Republicans of playing politics, saying the certificates were needed to fund critical services, including paying teachers. She then called another meeting of the Finance Council on Friday, during which Republicans accused Kelly of playing politics.

But after about 30 minutes of GOP members criticizing the governor, the Finance Council approved the certificates of indebtedness with only Senate President Susan Wagle, R-Wichita, voting against it.

The meetings provided a preview of what promises to be bruising battles over the state budget between Kelly, a Democrat, and the Republican-dominated Legislature. With school funding making up about half the state budget, education officials should remain aware about the developing budget situation.

Kelly’s Budget Director Larry Campbell presented a draft plan to avoid a $700 million budget deficit in the next fiscal year caused by the loss of revenue related to the COVID-19 pandemic and accompanying economic downturn.

Campbell said the plan doesn’t reduce the state’s commitment to operate schools. However, it would delay a payment to schools by one day, moving $77 million in funding from the current fiscal year into the next fiscal year. And the allotments would reduce an $8.5 million increase for career and technical education and $5 million increase for school safety grants.

The plan relies heavily on delaying $264 million in payments on a no-interest loan the state made to itself from the Pooled Money Investment Board, a long-term investment fund that was raided to cover budget holes under former Gov. Sam Brownback.

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