Looking Ahead at Fiscal Year 2024

October 26, 2023

As the budget for FY 2024 (which began July 1, 2023, and ends June 30, 2024) was being created, state revenues were stronger than ever. This resulted in an almost $2.3 billion surplus in FY 2022.

Lawmakers’ appropriations proposals for the excess funds were numerous and included individual income and sales tax breaks, a one-time tax rebate, broad state employee pay increases, and investments to vital areas like child care and special education. Not all of these priorities were funded, but the final budget extends and, in some cases, enhances many programs and services valued by everyday Kansans.

The FY 2024 budget totals $23.8 billion from all funding sources, with $9.5 billion from the State General Fund (SGF), which is funded through state tax collections. This is a total budget decrease of $1.1 billion, or 4.2 percent, with an SGF increase of $190.6 million, or 2.1 percent, more than that approved for FY 2023.

 

How Is the Budget Funded?

Funding for the FY 2024 budget comes primarily from tax revenues, which are deposited in the State General Fund. Tax revenues account for much of the total budget, while federal funds and dedicated special funds make up the remainder.

 

Within the State General Fund, individual income and sales taxes comprise 81.4 percent of the total, with both expected to continue performing well in the coming year, according to forecasts. The first month of tax revenues for the new fiscal year has already brought in $13.9 million, or 2.1%, more than estimated.

Major Spending in the Budget

Education and Human Services spending alone make up more than 79 percent of the total budget. The Education budget category includes agencies that provide state support for primary, secondary, and higher education. Human Services includes agencies providing welfare assistance; medical services; unemployment insurance benefits; care and counseling for veterans, the elderly, developmentally disabled, and mentally ill; and preventative health services through local health departments.

Let’s take a closer look at both of these, as well as some federal funds, to better understand their role in the Kansas budget.

Education in FY 2024

Total funding for K-12 and early childhood education decreased by just under $80,000 from FY 2023 to FY 2024 to total $6.7 billion, with $4.6 billion of that coming from the State General Fund. Despite current state law requiring that funding for Special Education State Aid be equal to 92.0 percent of excess costs over regular education, the Legislature refused a proposed plan to reach that goal by FY 2028 by committing $72.4 million SGF each year. Instead, the approved appropriation of $7.6 million is expected to cover approximately 69.1 percent of school districts’ excess costs statewide, or a shortfall of $175.3 million from the legal requirement. School districts must make up the difference by using money from the rest of their budget to cover gaps in special education.

Other noteworthy fiscal and policy additions in the Education budget include:

• $3.0 million SGF for the Mental Health Intervention Team Pilot Program
• $1.0 million from the Children’s Initiatives Fund (CIF) to expand access to Dolly Parton’s Imagination Library for all Kansas counties
• $900,398 from the CIF for the Parent Education Program
• The establishment of a Special Education and Related Services Funding Task Force to study and make recommendations for changes to the current funding formula for special education and related services for FY 2024

Human Services in FY 2024

Total funding for Human Services programs is $8.1 billion, which is a decrease of $146 million from the FY 2023 amount. Of that, the $2.6 billion in SGF alone was 5.6 percent, or $139 million, higher than FY 2023 due to a few factors, including:

1. Continued higher-than-normal enrollment in KanCare (the state’s Medicaid program) while participant eligibility is being redetermined after the official end of the public health emergency.
2. Ongoing staffing shortages which have necessitated increased use of contracted nursing and care staff, as well as pay increases to help hire and retain state employees.

Kansas failed to expand KanCare, again missing out on a federal expansion incentive that would have lowered the state’s matching contribution from the State General Fund. And, with the “unwinding” process of determining participant eligibility having begun back in April 2023, many Kansans are getting kicked off KanCare due to making too much to qualify.

Notable additions to the Human Services budget include:

• $159.2 million, including $62.1 million SGF, to raise and standardize reimbursement rates for facilities and providers serving Medicaid populations
• $51.2 million, including $20.6 million SGF, to increase rates for elderly and intellectual and developmentally disabled (I/DD) waiver service providers
• $88.6 million, including $34.0 million SGF, to transition the state’s remaining community mental health centers (CMHCs) to certified community behavioral health clinics (CCBHCs)
• $3.0 million SGF for senior nutrition services
• $2.5 million SGF for a child care pilot project in a high-needs area
• $1.5 million SGF to maximize the match for the federal Child Care and Development Fund (CCDF)
• $1.2 million, including $482,880 SGF, to extend Medicaid adult dental coverage to include dentures and partials
• $350,000 SGF to promote disease screening and pre-conception health care
• $800,000 SGF for local health departments

This year's budget also includes two major appropriations from the State General Fund to address ongoing statewide concerns:

• $50.0 million SGF in grants to help Kansas communities cover their funding match for federal infrastructure grants; and
• $120 million, including $46 million SGF, for a long overdue pay plan that will raise salaries for all full-time state employees to within 10 percent of market pay, mitigating ongoing concerns about hiring and retention problems across most state agencies.

Conclusion

After successfully addressing structural budget issues through the building of the state rainy day fund and paying off large debts in FY 2023, this year's budget had the opportunity to improve investments for critical need areas, such as access to reliable child care, a more robust safety net, special education, and targeted tax policy changes to provide relief to the low- and middle-income individuals and families who need it most.

 Sadly, with tax proposals that would have benefited the wealthiest Kansans dominating the session, the final FY 2024 budget missed the mark with hardly any of the state's surplus passed on to everyday Kansans.

 The 2024 Legislature will still have all these pressing needs to address (and perhaps more), but prioritizing all Kansans — particularly the most vulnerable — in a way that reflects our collective values must be a deliberate choice. With all signs currently pointing to another year of good revenues and subsequent surplus, lawmakers will have yet another opportunity to champion a more equitable state budget that enhances the lives of all Kansans.

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