No more school bus woes? House budget tweaked to fully fund school transportation

More money for school transportation and economic development headlined changes made to the House budget proposal in committee Wednesday.

School transportation has not been fully funded by the state, with individual districts being left to fund the rest of the cost, since 2004, according to the Kentucky Center for Economic Policy.

Under the new proposal in House Bill 6, the state budget bill from House Appropriations & Revenue Chair Jason Petrie, R-Elkton, school transportation would be 100% funded by fiscal year 2025-2026.

The last budget passed by the GOP-led state legislature funded about 70% of estimated district transportation costs. The gap has been highlighted in recent months, particularly following transportation difficulties in Jefferson County Public Schools, the state’s largest school district, at the beginning of the academic year.

The total transportation allocation was initially proposed to leap from roughly $274 million per fiscal year in the current budget to $319 million and $359 million in the next two fiscal years.

Under the new budget proposal, that second figure moves to about $399 million.

A budget proposal from Democratic Gov. Andy Beshear unveiled in December included full funding for student transportation in both upcoming fiscal years, not just fiscal year 2026.

In Kentucky, fiscal years begin July 1 and run through June 30.

Funding to the state’s per-pupil formula – known as the Support Education Excellence in Kentucky, SEEK – remains roughly the same as proposed in the initial version of House Bill 6. That figure increased by about $40 million from the original proposal, a slight increase to the currently proposed $6.4 billion investment over two years.

Petrie said that the reason for that increase is an updated estimate from the Kentucky Department of Education.

The per-pupil figure is increasing by about 4% in the first fiscal year, then 2% in the second fiscal year. But the total investment is roughly the same, as public school enrollment across the state has decreased by about 28,000 in the last five years.

Rep. Kim Banta, R-Fort Mitchell, said the increases allow “local districts to utilize local revenues in other priority areas such as increasing salaries, improving educational programs, addressing decreased enrollment and strengthening core instruction to improve student academic outcomes.”

Several superintendents across the state recently claimed the overall SEEK allocation was not enough to adequately retain and attract teachers, as the budget encourages them to do. When asked about this by Rep. Josie Raymond, D-Louisville, Petrie said that he wasn’t sure the concerns were “fully vetted out.”

“But we are listening to them to make sure that we can do all we can do,” Petrie said.

Beshear’s budget proposal included a mandated 11% raise for all school employees. The current House budget proposal includes no such boost, instead proposing to fund schools almost exclusively through the SEEK formula and SEEK transportation.

Raymond also mentioned child care as an area of continued concern. The House budget proposal’s $70 million on this front falls short of the Beshear administration’s estimated $330 million to fill the holes left by federal funding streams drying up.

Kentucky Youth Advocates Executive Director Terry Brooks called the funding proposal for child care “disappointing” given that many pandemic-era sources of funding for child care are drying up.

“We have seen what happens when the child care system is fractured. We know that Kentucky, and every state, stands on the precipice of a crisis as federal funding sunsets. And it is befuddling – knowing the commitment to kids of so many House members – to see a budget that neglects such a critical element of the safety net for kids, working parents, and our state’s workforce,” Brooks said in a statement.

House Minority Caucus Chair Cherlynn Stevenson, D-Lexington, questioned the amount of money allocated for water and sewer infrastructure in House Bill 6, particularly in light of historic flooding in Eastern Kentucky.

“The governor’s budget bill had about $500 million appropriated, but this budget has about $150 million, and we know that after the Eastern Kentucky floods, our water and sewer infrastructure is crumbling,” Stevenson said.

Petrie said that he expects a bill to be filed that provides additional dollars for water and wastewater projects.

House Bill 6 was approved by the committee.

Extra $100 million for ‘mega-developments’

The only significant change adopted Wednesday to House Bill 1, a massive $1 billion-plus proposal for one-time appropriations, was an additional $100 million pool of money to the Kentucky Cabinet for Economic Development to support “approved mega-development projects” of at least $10 million.

Buzz of a potential mega-development project in Madison County began to spread in late 2023. However, no project on the 1,400-acre site in the county has been announced.

The investments in the bill, totaling more than $1.8 billion in its current form, come exclusively from the state’s Budget Reserve Trust Fund. It’s also known as the “Rainy Day Fund,” which has ballooned to more than $3.7 billion.

Another change on economic development in the committee substitute: A $50 million pot of money allocated to the Cabinet for Economic Development directed specifically to Hardin and Warren counties. Both are expecting large electric vehicle battery plants to come online in the coming years.

Other significant spending items in House Bill 1 include:

• $500 million to the Kentucky Teacher’s Retirement System and $300 million to the Kentucky Employees Retirement System Non Hazardous Pension Fund.

• $150 million to the Kentucky State Police pension fund.

• $150 million for drinking and wastewater infrastructure.

• Another $75 million for site development for economic development purposes under the Kentucky Product Development Initiative program.

House Bill 1 cleared the House Appropriations & Revenue Committee easily.

On the prospects of more cuts to the state’s personal income tax, Petrie said that projections under the proposed budget “look good” for another 0.5% drop from the current 4% rate. That drop would take place Jan. 2026. As for 2027, Petrie said “it’ll be close” and for the following year he said it will likely be “difficult” to hit the required budgetary triggers to cut the rate another 0.5%.