On Tuesday, the Kentucky House unveiled a $124.8 billion two-year spending plan to beef up funding for K-12 public schools, raise state employee salaries, target workforce development, and boost funding for Medicaid benefits by more than $2.6 billion over the next budget cycle.
The spending plan proposed in House Bill 6 does not include Gov. Andy Beshear’s proposed funding for universal preschool for 4-year-olds. Instead, the bill sponsored by House budget chair Jason Petrie (R-Elkton) proposes $168.9 million over the biennium for public preschool – the same amount of funding found in the current state budget.
Beshear proposed his $137 billion two-year state budget plan in December. Besides proposing $344 million to fund “universal” public preschool for all Kentucky 4-year-olds (not just those who fall under a certain family income level or those with disabilities or developmental delays, as current law requires), the governor’s plan would also mandate 11% raises for all school employees.
HB 6 would not mandate raises for teachers and school employees. Instead, it includes what the House majority caucus calls “intent language” encouraging districts “to utilize additional SEEK (school funding based on attendance) resources to provide raises for certified (teachers) and classified staff” while adding salary schedules and other district data to their websites.
The proposed increase in per pupil school funding in the House plan would be four percent or $4,368 next fiscal year and two percent or $4,455 in fiscal year 2026, or $117 million in fiscal year 2025 and $164 million in fiscal year 2026. That is roughly in line with what was proposed by Beshear in December.
Additionally, HB 6 proposes increased funding for the teacher’s pension system by $159.2 million next year and $302.1 million in fiscal year 2026. A separate bill (HB 1) sponsored by Petrie and filed along with the House budget bill would provide one-time funding of $500 million to pay down the “unfunded liability” – or pension benefits that have been earned but aren’t fully funded by the state – to the system.
For state employees, a salary increase of four percent in fiscal year 2025 and two percent in fiscal year 2026 is proposed in the House plan. Additionally, the bill would fund $500 million to pay down “unfunded liabilities” – or earned pension benefits not currently funded by the state – for the majority of state retirees.
One-time funding for the pension systems would come from the state’s budget reserve trust fund, now estimated at $3.7 billion and growing. The so-called “rainy day fund” is expected to exceed $4 billion at the end of this fiscal year on June 30. More than $1.74 billion of that would be carved out by HB 1 to fund pension benefits, drinking and sewer infrastructure, economic development site development and loans, rail development, state police laboratory needs, general aviation airports, and other uses.
“While we know there are those who would like to see us spend in more politically beneficial ways, we’ve chosen to make substantial investments in targeted areas that will improve the quality of life for Kentuckians today and strengthen the state’s fiscal position for the future,” Petrie said in a statement on HB 1 released by the House majority caucus on Tuesday.
After he released his budget plan in December, the Kentucky Lantern quoted Beshear as saying that he might support using part of the state’s budget reserves “depending on what (state lawmakers) suggest. It has plenty of money for any unforeseen circumstance that we would face.” The governor has said his proposed budget doesn’t rely on the budget reserves for future investment.
For Medicaid, HB 6 would increase funding for benefits by nearly $550 million this fiscal year while authorizing roughly $2.6 billion for growth in benefits over the next two years, including $456 million in state funds. In his budget address last month, Beshear said he wants to “fully fund Medicaid, including Medicaid expansion, to ensure that health care continues to be provided for over 1.5 million Kentuckians.”
Other areas of funding prioritized by the House majority in its spending plan in HB 6 include but aren’t limited to:
– Additional funds totaling $640,000 to cover additional burial costs for National Guard and Reserve veterans who may not be eligible for federal benefits
– $600 million over the next two years for facility maintenance, renovations, and repairs at state colleges and universities
– Additional funds totaling $85.5 million for waivers to serve those with substance use disorder
– Additional funds totaling $33 million for school resource officers (on a reimbursement basis at a $20,000 maximum per school)
– $24.1 million in new funds for pay increases for 1,013 state troopers and commercial vehicle enforcement officers with the Kentucky State Police
– $24 million to maintain increased reimbursement of child care assistance providers
– $15.6 million in additional juvenile justice funding for alternatives to detention
– $15 million to fund 100 new social worker positions
– $13 million to increase foster care per diem rates
– Additional funds totaling $8 million for new Family Resource Youth Service Centers in communities where an existing center serves more than one school
Beshear intended to get ahead of House Republicans when he released his budget proposal last month after winning his second term as governor in November. Two years ago, the House majority released its budget ahead of the governor’s traditional budget address to the General Assembly in January. The governor called foul on the move, according to the Herald Leader, which reported Beshear said the House majority “violated both longstanding practice and state law” by releasing its budget first.
In a statement Tuesday, House Speaker David Osborne (R-Prospect) said HB 6 will build on the current state budget, which he said is “by far the strongest, most fiscally responsible spending plan in modern history.”
“We know there are some who would like to see us spend every available dollar and go back for more by increasing taxes,” said Osborne. “Those economic policies have failed generations of Kentuckians and only create more problems in the future.”