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As the Kentucky General Assembly gears up for the regular session in January, a projected $1.3 billion shortfall in 2012 is weighing heavy on the minds of legislatures.
State Rep. Rick Rand (D-47th District) of Bedford, Ky., said that the commonwealth’s budget for 2011 is “in pretty manageable shape,” thanks to $3 billion from the federal stimulus bill passed earlier this year.
Of that amount, only $600 million was not earmarked for specific projects, he said. The Legislature used $400 million to shore up the state’s 2010 budget and will use the remaining $200 million to help balance the budget in 2011.
The stimulus funding, he said, helped the state stave off cuts to education and Medicaid.
Rand, who sells insurance and real estate from his Bedford office, also is co-chairman of the House Appropriations and and Revenue Committee and the 2010-12 Budget Preparation and Submission Subommittee.
He believes this time around, education probably won’t be so lucky.
Recently, there was talk that the Legislature might dip into contingency funds that all Kentucky school districts are required to set aside in their annual budgets.
That isn’t likely to happen, Rand said. Instead, the Legislature probably will cut education funding, which will, in turn, likely force districts to reach into their contingency monies to balance their own budgets.
Unless Kentucky receives more stimulus funds from the federal government, raises taxes or sees an unexpected growth in revenue or finds a new revenue source, “we will be forced to cut funding to
education out of necessity,” Rand said.
School districts are required by state law to hold back at least 2 percent of their annual budget in their contingency funds, Rand said.
Combined, the state’s 174 districts have $750 million in those funds.
In the 2009-10 Trimble County Public Schools budget, the Board of Education built up a contingency of $2.7 million – 17 percent of the total budget.
Overall, “that’s a lot of money,” Rand said.
“I’ve told my school districts to be prepared to tell the Legislature what they are using those funds for. If they are just sitting on it, that’s not really what it’s for, because it comes from taxpayers. It should be invested” in programs like all-day kindergarten.
“I’m all for a good contingency fund, because you never know when you will have an emergency,” Rand acknowledged.
Rand said he still favors the movement toward expanded gaming in the commonwealth, which would allow the building of casinos in Kentucky and slot machines to be added at horse-racing venues, including Churchill Downs in Louisville.
Rand said gaming would funnel at least $200 million in additional revenue to state coffers each year.
He says he believes gaming is the state's best hope, and said he doesn't believe it is likely the Legislature will raise taxes.
"It's not good to raise taxes on people who are already struggling," he said.
Additionally, 2010 happens to be an election year for both the chambers of the General Assembly.
contingency at $2.7M
Superintendent Marcia Haney-Dunaway said Tuesday that Trimble’s contingency was set high to ensure the district had enough funds to cover construction of the new Milton Elementary School and to cover a projected loss of $450,000 in state revenue because of an anticipated decrease in enrollment. The district also will have to cover that amount in 2010-11 unless enrollment increases, Dunaway said.
The fund also is there in case of unexpected expenses, such as replacing furnaces or roofs – items that could cost as much as $500,000.
Additionally, the board plans to use some of the funds for improvements at the high school and middle school, and to academic programs districtwide. For instance, the board discussed last month an upgrade to the electrical system at TCHS to accommodate technology, such as Smart Boards.
Cuts in state funding would force the district to use continency monies, instead, for day-to-day operating expenses, Dunaway said.
Either way, “the Trimble County School District is positioned to handle adverse economic conditions without being forced to curtail current academic programs,” she said. “We can weather the storm for a couple of years.”
Dunaway said the district’s 2010-11 draft budget shows a contingency of $1.5 million. The draft budget is on the agenda for the board’s regular meeting at 7 p.m. Wednesday, Dec. 16.
(Editor’s note: State Sen. Ernie Harris, R-26th District, was contacted for comment on the upcoming legislative session but was unavailable before press time.)