news commentary
  July 27, 2012


Fuzzy Math and Foggy History in Brownback's Self-Examination

by Peter Hancock | Kansas Education Policy Reports

The upcoming primary elections have been described as a war for the heart and soul of the Kansas Republican Party, and Gov. Sam Brownback has left no doubt which side of the war he is on.

And so it was that Brownback held a news conference Wednesday, July 25, just two weeks before primary election day, to share with the statehouse media the same charts, graphs and talking points he’s been repeating across the state as he stumps to get rid of moderate Republicans and replace them with loyal conservatives.

The gist of his message is that mid-way through his first term, Brownback and his conservative allies have restored fiscal health to a state that was on the brink of insolvency, and that all this was done while increasing funding for K-12 schools, higher education and Medicaid.

His claims contain a few elements of truth. Since he took office in 2011, ending balances in the State General Fund have grown from next-to-zero to a healthy $466.3 million. Next year’s ending balance is projected at $470 million, slightly more than the 7.5 percent required (but routinely ignored) in state law.

Brownback can legitimately claim credit for some of that. But as he tells the story, his narrative is so replete with wrong dates, inaccurate numbers and selective facts, it becomes difficult to isolate the truth.

Claim 1: All of the turnaround occurred during Brownback’s watch, and the challenge facing the state was enormous.

“We had less than a thousand dollars in the bank at the end of the fiscal year when (Lt. Gov.) Jeff (Colyer) and I took office,” Brownback said. “And we faced a $500 million projected budget deficit in that first year. That’s the situation we had coming into office. … Working with the legislature we turned a projected $500 million budget deficit in FY 2011 into a positive $188 million ending balance.”

This statement, while containing a few nuggets of truth, nonetheless proves the old adage that a lie can circle the globe in the time it takes the truth to tie its shoelaces. It took about 35 seconds for Brownback to utter those words. It’ll probably take several paragraphs to straighten them out.

The first statement is flatly false. The state ended FY 2010 with less than $1,000 in the bank ($876.05, to be exact). But that occurred on June 30, 2010, fully six months before Brownback and Colyer took office.

Also, the prior administration and legislature did most of the heavy lifting to dig out of that hole. Then-Gov. Mark Parkinson (Dem.) forged a coalition of Democrats and moderate Republicans to pass a temporary 1-cent sales tax increase.

When Brownback came into office in January 2011, the budget was still quite tight. But in no way was it facing a $500 million deficit for that year.

The $500 million deficit was projected for the following year, FY 2012, and was based on a number of assumptions. Among them was the fact that federal stimulus aid would soon run out.

Typically, those projections also factor in a for a 7.5 percent ending balance — something required in statute but routinely ignored in practice during tight economic times.

Mid-way through that session, the state did run into trouble, mainly due to the rising cost of Medicaid and other social services, a common effect of a recession.

Ultimately, Brownback and his Republican allies did find a path to close the gap. They used state dollars to replace federal stimulus money for Medicaid, but not for K-12 education. Public schools took a huge hit, and the money that otherwise would have gone to schools was used to build up cash reserves: $188.3 million at the end of FY 2011; $466.3 million as of June 30, 2012; and a projected $470 million for the current year, FY 2013.

Brownback says that was necessary to pave the way for the massive tax cuts that will take effect next year.

Claim 2: Brownback and the conservatives have actually increased funding for K-12 education.

This statement is true, only if you count the mandatory increases in retirement contributions and the state’s share of local bond and interest payments.

However, the mandatory increases in retirement funding have nothing to do with giving teachers better benefits. Those increases are only to make up for the decades of deliberate underfunding of the Kansas Public Employees Retirement System (KPERS) dating back to the 1990s under both Republican and Democratic administrations.

Also, under the Kansas school finance scheme, state general fund money is used to subsidize the debt payments of less wealthy districts. That allows property-poor districts the same opportunity to fund new buildings and other big-ticket items as property-rich districts. Otherwise, a poor district like Galena in southeast Kansas would have to levy 100 times more property tax to build a new grade school as a rich district like Olathe or Blue Valley would.

But as every school administrator (and criminal defense lawyer) knows, those pots of money are not “fungible.” You cannot use bond and interest money to pay teacher salaries. (The Securities and Exchange Commission is really fussy about that.) Nor can you use the state’s contributions into KPERS to pay the heating and light bill for a local high school.

To pay the day-to-day costs of running a school — teacher salaries, utility bills, janitors, etc. — schools rely mainly on what’s called “Base State Aid Per Pupil” (BSAPP). That’s the amount of money Kansas gives to each school district based on its “weighted” enrollment (adjusting for poverty rates, special education population, the number of English Language Learners, etc.)

When Brownback came into office, BSAPP had already been cut from $4,400 in FY 2009 (before the recession hit) to $4,012 in FY 2011. In March 2011, Brownback ordered “allotment” cuts to balance the current year’s budget, almost all of which ($50 million) came directly out of base state aid for schools.

He also proposed that for the following year, FY 2012 (the year that just ended), schools absorb the full impact of the loss of federal stimulus money, lowering base state aid to $3,780 per-pupil — the lowest level since the late 1990s. Meanwhile, the state would build up cash reserves in preparation for the massive tax cuts.

For the upcoming year, conservative leaders in the House relented just a bit and agreed to add back about $58 per-pupil. But that still leaves schools $174 per-pupil short of where they were before Brownback took office.

For a district like Kansas City USD 500, that translates to a loss of about $5.4 million a year.

Claim 3: These actions were necessary because the Kansas economy was in a long-term downward spiral when Brownback took office.

Brownback’s key measurement (and it’s certainly a valid one) of economic health is private-sector job growth. During the 2000s, which he refers to as the “lost decade,” Kansas shed more than 20,000 private-sector jobs. And that’s certainly the impression one gets if you only take a snapshot once a decade — say, in 2001, and then again in 2011.

What that statement hides is the fact that the Kansas economy closely tracked the U.S. economy. From 2001-2003, Kansas lost private-sector jobs. Then the economy rebounded (despite the absence of any major income tax cuts) and experienced steady private-sector job gains through 2008. Then the global economy tanked, for reasons that had nothing to do with state income tax rates in Kansas, and there were significant job losses through 2010.

Since late 2010, according to Kansas Department of Labor statistics, there has been slow job growth, albeit much too slow for many people. As of May 2012, the number of private sector jobs had recovered to roughly the same point as 2001, but still a bit short of the peak in 2008.

It can be argued that the massive tax cuts that Brownback and his conservative allies will spur even more private-sector job growth and that Kansas will rebound more buoyantly than it otherwise would have if tax rates had been left alone.

Most independent economists are highly skeptical of that. But it is the central issue at stake in the upcoming primary elections.

Do you think the massive tax cuts will force economic prosperity to come bubbling up out of the ground? Or will they merely put a stranglehold on state government that result in starving public schools, higher education and the state’s social service safety net?

Those are the central questions facing voters — especially those voting in Republican primaries — when they go to the polls Aug. 7.

© 2012, Hancock Publishing Co. All rights reserved. Reposted here with permission.