- Associated Press - Tuesday, January 21, 2014

FRANKFORT, Ky. (AP) - Gov. Steve Beshear proposed reshuffling state funds Tuesday night to bolster Kentucky’s public schools, recommending a large infusion of money for classrooms gained from another round of budget cuts.

Kentucky’s higher education system was among the broad list of targets for spending cuts in the $20.3 billion, two-year state budget plan that Beshear presented to lawmakers.

The second-term Democratic governor outlined his budget priorities in a speech to a joint session of the General Assembly. It marked the starting point for nearly three months of haggling as the Democratic-led House and Republican-controlled Senate craft a budget for the two years starting July 1.

As promised, Beshear found extra money for Kentucky’s elementary and secondary education system by recommending $98.6 million in spending cuts.

The reinvestments in education will make Kentucky more competitive, he said.

“This budget proposal strategically focuses our very limited resources on what I believe will deliver the greatest return: A more highly educated population that will become a more talented workforce,” he said.

Beshear proposed an extra $189 million over current funding for the state’s main funding formula for K-12 classrooms. The increase would raise per-pupil spending to its highest total ever in Kentucky, he said.

From 2000 to 2008, the funding formula grew an average of 3.4 percent yearly, he said. Since 2008, when the recession hit, funding has been flat, even as the state recovers from the economic downturn.

The governor proposed pay raises for teachers and other school employees. He also proposed spending $36 million over two years to expand preschool services to serve an estimated 5,125 more 4-year-olds.

He targeted more funding for textbooks, staff development, extended school services and school safety.

Beshear recommended that many state agencies, including the governor’s office, take a 5 percent budget cut in the first year of the two-year budget cycle. Among other agencies targeted for the cut were the Public Protection, Labor and Finance cabinets, the Agriculture Department and the attorney general’s, auditor’s and treasurer’s offices. Those agencies’ budgets would remain flat in the second year.

He acknowledged the cuts would cause more damage to a state government that has endured about $1.6 billion in state spending cuts in the past six years as tax collections plunged amid the downturn.

The latest cuts could result in delayed services and possible layoffs and facility closures, he said.

He proposed a 2.5 percent budget cut in the first year of the budget cycle for universities, community and technical colleges and Kentucky State Police. As a result, colleges and universities face cumulative cuts of 17 percent since the recession if the latest cuts go through, the governor said.

“This was one of the most difficult choices made in this budget, because higher education deserves more support, not less,” Beshear said. “But there simply is no way to create enough money to make the needed investments in pre-K through 12th grade unless higher education is included in the reductions.”

House Speaker Greg Stumbo, D-Prestonsburg, warned that cutting operating funds for universities will lead to higher tuition to make up the lost revenue.

But he said the governor’s plan hit on a number of key issues, including education, job growth, transportation projects and social services.

“You look across Kentucky, everybody got brought into the loop, I think,” Stumbo said.

Senate President Robert Stivers said Beshear found new money for his priorities without higher taxes.

“From what we can add up, over the biennial period he’s found in excess of three-quarters of a billion dollars to spend without any new revenues,” said Stivers, R-Manchester. “Which justifies … the point we’ve been saying, that with good management, it’s not a revenue-raising question, it’s a spending plan.”

Meanwhile, the governor recommended authorizing $145.5 million in agency bonds to help finance expansion projects across the Kentucky Community and Technical College System.

He said it represents the single-largest investment in the KCTCS system since its formation. The two-year system has grown to about 100,000 students at its 16 colleges and 73 campuses, he said.

Agency bonds would fund up to 75 percent of the projects’ costs. The remaining costs would be covered by local communities where projects occur, as well as other public or private sources, he said.

Beshear recommended investing $60 million in General Fund-supported bonds for the “Bucks for Brains” program to lure more top-notch faculty and researchers to the state’s universities.

His budget plan also included more than $520 million in capital construction projects for the state’s four-year public universities, also backed by General Fund-supported bonds.

Those projects include a new science building at Eastern Kentucky University, a health innovation building at Northern Kentucky University and the final phase of Murray State University’s new science complex.

On the economic development front, Beshear proposed investing $100 million to spread high-speed Internet access to every area of Kentucky. Kentucky ranks 46th in broadband availability, and nearly one-fourth of the state’s rural areas lack broadband access, the governor said.

“Access isn’t just about being able to sign on to Facebook,” he said. “It’s about speed and capacity that allow us to attract high-tech, knowledge-based and information-intensive businesses to Kentucky.”

His social services priorities included restoring funding cuts to child-care assistance and providing money to increase breast and cervical cancer screenings for more Kentucky women.

Beshear said his budget proposal reflected modest revenue growth and fixed costs the state must cover, including a mandate to pump more money into the government pension system to restore its solvency.

The governor proposed spending more than $200 million in state General Fund money in the next two years to shore up the Kentucky Retirement System.

His proposal included money to increase pay for state employees, who have gone without raises since 2010.

Beshear said his budget blueprint did not dip into the state’s “rainy day fund.”

It also didn’t assume any revenue windfall from revamping Kentucky’s tax system or legalizing casino gambling - two issues that Beshear wants lawmakers act on this legislative session.

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