Analysis: State Budget Dramatically Reshaped by Covid-19 Pandemic – What Does this Mean for Education? – Prichard Committee for Academic Excellence
Prichard Committee for Academic Excellence

Analysis: State Budget Dramatically Reshaped by Covid-19 Pandemic – What Does this Mean for Education?

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With the state capitol still under restricted access, the Kentucky General Assembly returns to Frankfort today to take final action on House Bill 352, the state budget – a spending plan now reflecting the dramatic (and still unknown) impact of the Covid-19 pandemic on the state’s financial resources.

Due to these rapidly changing circumstances, House and Senate leaders have agreed to essentially a 1-year continuation budget. Based on $115 million less revenue in fiscal year 2021 than originally forecast, funds are only appropriated in the first year of the up-coming biennium.  In public comments, leaders have stated their intent to address fiscal year 2022 and adjustments to fiscal year 2021 in January.  At that time, the hope is much more will be known about the impact of Covid-19 on available revenue.

Under the revised spending plan, public pensions will receive full actuarially required contributions (ARC) maintaining the commitment to fully fund these plans. No raises are provided to any public employees – including teachers and district staff.  There is also no increase in the base SEEK guarantee – the main funding formula for Kentucky’s school districts. New funding remains to hire more school mental health professionals, as well as increases to student financial aid – committing nearly all lottery proceeds to these programs.

Earlier versions of the budget this session offered welcome sights in stable and even modest increases in education investments.  These actions have now been tempered by the on-going Covid-19 crisis – the impacts of which on the economy are sure to be significant. Concerns remained even before recent events about the lack of new revenue to sustain the scale of investments (see our Big Bold Ask) necessary to ensure education excellence in Kentucky – from early childhood through postsecondary.  These concerns are now amplified and will certainly be difficult to bear without substantial financial relief from the federal government (see our analysis this week of what Kentucky may receive to support education in the federal CARES Act stimulus package).

It is difficult to find a silver lining in current events.  But one must wonder if this crisis might offer a forced opportunity to consider and realize new investment and innovation in community supports, and in teaching and learning.  We have been hearing of challenges and responses from educators and communities to the crisis in a series of on-line forums – and it has been both sobering and inspiring. From the critical role childcare plays in supporting working families, new ways technology is being leveraged to deliver to students in K-12 and postsecondary, to concerns about equity as educational opportunity shifts to virtual environments.  Our Big Bold Ask addressed parts of these with substantial investments for early childhood and a new Fund for Teaching Excellence to push innovation in teaching and learning.  As Kentucky responds to the crisis, there is opportunity to amplify innovations, ensure equity, and push for future investments in the most critical areas.

The COVID-19 pandemic has placed families, communities, states and the nation in very difficult and unforeseen circumstances. The General Assembly has responded to the crisis appropriately, reframing the budget, and taking a cautious approach until the full impact of the crisis is realized. Despite the budget constraints in our current economic reality, it is more important than ever that we maintain our education progress. Through the federal CARES Act, Kentucky could see as much as $410 million to backstop critical educational supports across the pipeline, from day care to higher education.

This funding, and any state dollars allocated for the education pipeline will ensure that education continues, building resiliency for individuals and families during this time of economic downturn.

Hopefully, our response and recovery to the crisis will be swift and strong and the legislature can return in January with an eye toward investments in education necessary to build towards a big, bold future for all Kentuckians.


Following is our high-level analysis relative to our Big Bold Ask with detailed tables linked here for early childhood programs, K-12 and postsecondary education.  See our earlier posts for analysis of the Governor’s,  House’s and Senate’s proposals.

Early Childhood

Achieving high-quality early learning opportunities for all children requires additional investment. This is critical when almost 50 percent of our children enter kindergarten not ready to learn, and 50% of Kentucky families live in a childcare desert and quality childcare is either non-existent or unaffordable for working parents.  The free conference committee proposal does not make progress on these investments, essentially holding them at current levels while removing preschool partnership grants.

  • Public Preschool – The free conference committee proposal maintains the eligibility threshold for public preschool at 160% of the federal poverty level. Total funding is held constant at current level of $84.4 million. The Preschool Partnership grants previously funded at $7.5 million are removed. These grants were a positive support for communities to blend services between public preschool and private childcare, and we are disappointed to see them removed.  We proposed an additional $24 million over the biennium in our Big Bold Ask to begin phasing in investment for eligibility up to 200% of the federal poverty level, higher per-child rates to support quality programs, and continue support for preschool/childcare partnership grants to support families with full-day learning opportunities for kids.
  • Child Care Assistance Program (CCAP) – The free conference committee proposal also maintains the eligibility threshold for CCAP at 160% of the federal poverty level – providing $10.6 million in General Fund support which is the same as the current level. Similar to preschool, these funds are not sufficient to move the per-child reimbursement rates necessary to support the true cost of quality . Our Big Bold Ask was for $92 million over the biennium to begin phasing in investment for eligibility up to 200% of the federal poverty level, as well as higher reimbursement rates to support quality programs – for infants, toddlers, and preschool age children.

View our analysis: Kentucky Early Childhood Budget

A critical concern is a $2 million cut in tobacco settlement dollars to the HANDS early home visiting program.  HANDS provides critical supports to improve pregnancy and birth outcomes, promote healthy child development, build safe homes, and increase families’ self-sufficiency.  While we understand this reduction may be off set using other funds, the budget does not make this clear and explicit.


To deliver excellence for each and every Kentucky child in our public school, Kentucky needs to restore investments after long years of cuts and lost buying power.  The free conference committee proposal was unable to sustain proposed increases in the SEEK base and pay increases proposed in earlier versions.  Notable increases are made to hire additional school mental health professionals and provide funds for career and technical education (CTE).  Kentucky will need deeper investment to support teaching and learning at the local level we recover from the current crisis.

  • Full-Day Kindergarten – This is not in the free conference committee proposal. Our Big Bold Ask was for $42 million over the biennium to begin phasing in investment for full-day kindergarten – freeing local funds for teaching and learning improvements.
  • Transportation – The free conference committee proposal provides no new funds for school transportation, underfunding the transportation formula as has been the practice for a number of years. Our Big Bold Ask was for $48.6 million over the biennium to begin phasing in investment for transportation – freeing local funds for teaching and learning improvements.
  • Fund for Teaching Excellence – Kentucky must invest in systematic state support for teacher preparation, professional development, and recruitment and retention – areas that remain underfunded or not at all. Our Big Bold Ask was for $17.5 million over the biennium to invest such supports like teacher mentorship, greater stipends for National Board Certified teachers, and district/university partnerships to innovate teacher preparations and professional learning. This type of strategic fund could be even more necessary to support equitable innovations in the use of technology to support students going forward.

View our analysis:  Kentucky P-12 Budget

Postsecondary Education

Kentucky’s Council on Postsecondary Education has set an attainment goal of 60% by 2030, while economic projections suggest that the supply of workers with postsecondary education continues to fall short of the demand for an educated workforce. To reach these goals, Kentucky must break down barriers to college access, ensure higher education is affordable, and support student success.  The free conference committee proposal stems the cycle of funding reductions to our colleges and universities – and increases funds for student financial aid.

  • Colleges and Universities – The free conference committee proposal includes a 0.6% increase in total funding direct to campuses in fiscal year 2021. This increase includes $15 million to be allocated through the performance funding model.  This is much less than either the House or Senate’s original proposals. Our Big Bold Ask was for $93 million over the biennium to begin phasing in investment to fully implement the performance funding model.
  • Need-Based Financial Aid – With lottery receipts projected to rise, this is a bright spot in the budget. The free conference committee proposal includes $11.4 million for College Access Program grants for low-income students.  Our Big Bold Ask was for $8.9 million over the biennium to begin phasing in investment in CAP grants.  Not only will CAP grants see an increase, but also other critical financial aid programs such as KEES, KTG, Dual Credit, and Work Ready scholarships.  Of note, $750,000 of lottery proceeds are redirected from student financial aid to support the following education-related programs:
    • The Jobs for America’s Graduates Program at the Department of Education.
    • The Support Higher Education Project at the University of Kentucky.

View our analysis: Kentucky Postsecondary Budget

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