Tim Jones & Jennifer Oldham
November 3, 2014

Public schools in Kansas have closed classrooms, fired teachers, increased class sizes and raised local property levies following statewide tax cuts, undermining the re-election bid of Republican Governor Sam Brownback, the man who promised them.

The financial impact of keeping the tax-cut pledge finds Kansas school districts at the political epicenter of the Nov. 4 governor’s race. The 58-year-old Brownback, who won 63 percent of the vote four years ago, is locked in a tight race against Democratic state Representative Paul Davis.

Brownback, a former U.S. senator and presidential candidate, called the cuts an experiment that would result in economic growth and a population surge. Neither happened, and the political blowback has been fierce. School superintendents warn of more austerity as they try to adjust to state revenue losses that came in $335 million larger than forecast.

“The outward ripple is felt in many ways.”

Annie McKay, executive director, Topeka-based Kansas Center for Economic Growth
“At the current rate, we’ll be bankrupt in Kansas in a very short period of time,” said Cynthia Lane, superintendent of Kansas City Public Schools. “We don’t have a long-term plan. We just have a cut-tax desire, regardless of the outcome.”

Hundreds of Republican officials, including a former state party leader, have repudiated the governor and condemned his tax cuts as reckless. The backlash has spread to other Republican incumbents, including U.S. Senator Pat Roberts and Secretary of State Kris Kobach, each of whom is getting a solid challenge in this reliably conservative state.

Landmark Ruling

About 90 percent of Kansas parents send their children to public schools, from the 81-student system in Winona to Wichita, the state’s largest district, with about 51,000 pupils. More than half of local school budgets come from state funding.

Kansas holds prominence in the history of U.S. public education: Schools in Topeka, the capital, were among the defendants in the landmark 1954 Supreme Court decision Brown v. Board of Education, which outlawed racially segregated schools.

Now the state, which has a population of 2.9 million, is under scrutiny for its embrace of the idea that tax cuts promote job development. Although other states have followed that course, none has slashed rates so far, so fast.

“They’re looking at Kansas to see what happens when you drastically reduce taxes, expecting the economy to grow to replace the revenue,” said Norton Francis, senior research associate at the Urban-Brookings Tax Policy Center. “People like the tax cuts, but they want the services as well, and that’s sort of the problem.”

Repairing ‘Damage’

Schools had already cut spending during the 18-month recession that ended in 2009, and the income-tax reductions extended the austerity. Kansas tied for the sixth-deepest reductions to per-student state funding between fiscal 2008 and fiscal 2015, according to an Oct. 16 analysis by the Washington-based Center on Budget and Policy Priorities, a research group that advocates for low-income households.

Kansas slashed 14.6 percent per student when adjusted for inflation during that period, tying with Wisconsin and bested by only Oklahoma, Alabama, Arizona and Idaho, the report found. Base per-pupil funding levels in Kansas are now at 1991 levels.

“Unlike most states that didn’t try to slash their income taxes, it’s going to be very hard for Kansas to repair the damage that was done by the recession,” said Michael Leachman, the group’s director of state fiscal research.

‘Failed Experiment’

Davis, 44, calls the rollback a “failed experiment.” Brownback blames school-funding shortages on the recession and his predecessor, Democrat Mark Parkinson. He promises more cuts if re-elected and predicts they will ultimately stimulate economic growth.

“I don’t believe it,” is how Jim Freeman, chief financial officer at Wichita Public Schools, responds to that forecast. “I just don’t see how we get that kind of economic growth in the state.”

Kansas ranked as the fourth-worst U.S. state in economic health for the first half of this year, according to the Bloomberg Economic Evaluation of States. The index measures tax collections, home prices, mortgage delinquency, job growth, personal income and performance of local company shares.

In 2012, the legislature cut the top income-tax rates by 26 percent, eliminated levies on about 191,000 small-business owners and increased standard deductions for married and single head-of-household filers. Revenue drops were assured, although the decline was greater than state budget analysts had forecast, about $335 million more, at the end of June.

Depleted Surplus

A $700 million surplus is almost gone. The projected deficit by next July is $260 million, according to the legislature’s nonpartisan research staff. Moody’s Investors Service and Standard & Poor’s cut Kansas’s credit rating. Moody’s downgraded the rating to Aa2, third highest, from Aa1 on April 30, saying revenue reductions “have not been fully offset by recurring spending cuts.”

The school-funding cuts are felt equally among 293 districts regardless of income or ethnic makeup, said Annie McKay, executive director of the Topeka-based Kansas Center for Economic Growth, a nonprofit group that analyzes state policy.

“We are a fairly rural state, and for many communities school districts are the largest employer,” McKay said. “When we reduce budgets, school districts have less to purchase in their community. The outward ripple is felt in many ways.”

Taxes Raised

Since 2009, class sizes grew by 19,000 students while the state lost 665 teachers, according to a Sept. 2 report by the center. About 30 percent of districts reduced or eliminated athletic and other extracurricular activities, the study showed.

About 65 counties raised local property taxes in 2013 to mend holes in their budgets, according to the Kansas Center for Economic Growth. School districts offset a portion of state cuts by increasing local property taxes, said Cheryl Semmel, executive director of the United School Administrators of Kansas.

To cope, 62 superintendents are doing double duty. Duane Dorshorst serves as both superintendent and an elementary school principal at the 370-student Oberlin Unified School District 294 in northwestern Kansas.

“I haven’t been able to give my staff a raise in three years,” he said. “It’s harder to attract people, especially good-quality teachers, when the deficit is already there.”

A drop in state aid also meant tough choices for Smoky Valley Superintendent Glen Suppes, who froze and then reduced teacher salaries, did away with field trips, required parents to pay a half-day of kindergarten, cut coaches and tightened budgets for supplies. The most difficult decision, he said, involved closing the only elementary school in Marquette this year. Its 65 students are now bused nine miles (14 kilometers) to Lindsborg.

“It tears the district apart, it divides communities,” Suppes said of the school board’s vote to shut down the campus.

Brownback and Davis are in a statistical dead heat, according to an average of polls compiled by RealClearPolitics.com. Among the first tasks of business for the victor: working with the legislature to balance the budget.

“Many of the schools are anticipating they will have additional cuts during the year,” said Suppes. “No one can see how the budget is going to balance by next spring.”

Read more from Bloomberg here.

ClayBLOOMBERG: Brownback Faces Blowback as Kansas Tax Cuts Shutter Classrooms