Beshear unveils his state spending plan: teacher raises, universal pre-K, water infrastructure

Governor gets jump on budget process after GOP House preempted him in 2022

By: - December 18, 2023 8:10 pm

Gov. Andy Beshear introduces his proposed budget on KET Monday night, a speech usually made to a joint session of the legislature. (KET screenshot)

FRANKFORT — Newly reelected Democratic Gov. Andy Beshear unveiled  a proposed two-year state budget —  15 days before the Republican-dominated legislature is scheduled to convene — and began selling his ideas to a statewide audience on KET Monday night.

The $136.6 billion spending plan, what Beshear called the “largest budget that we’ve seen in history,” would add more than $2.5 billion to public education, including an 11% raise for school employees. It would provide $500 million for continued investment in water and wastewater infrastructure and $395 million to fully fund the state’s expanded Medicaid program. 

Beshear also is seeking $141 million over two years to aid child care facilities facing “scary” financial situations due to expiring federal aid provided during the COVID-19 pandemic. The state funding proposed by Beshear would maintain daily financial reimbursement rates that child care providers currently receive, along with opening up more availability at child care facilities, according to the budget briefing.

Beshear said strong tax revenues and budget surpluses have allowed for the expansive budget; the General Fund surplus at the end of fiscal year 2023 was more than $1.55 billion

In releasing his budget earlier than is traditional, Beshear turned the tables on House Republicans, who two years ago surprised Beshear by filing a budget bill before the governor released his budget or delivered his budget address to a joint legislative session. At the time, the governor’s office asserted the move “violated both longstanding practice and state law.” 

Beshear in an embargoed  press briefing on his budget proposal Monday morning said he  believed the House releasing a proposed budget before the governor in 2022 was not “good procedure.” He also said he expected Kentucky House Speaker David Osborne to again preempt the governor’s budget. 

“This isn’t about who wins or who’s the fastest. It’s about having the best product, and being the head of the executive branch — having an entire budget office that works on this for two years ahead of time — we’re in the best position to give the first initial proposal that, now, the House can look at and add any piece of it to what they’re going to file,” Beshear said. 

It’s unclear if Beshear’s budget priorities — including investing more in public education, on which he campaigned — will gain traction among the GOP lawmakers who hold supermajorities in both chambers of the legislature. 

Speaker Osborne on Monday said: “The legislature has been working on the budget we will consider during the 2024 Regular Session since we passed the current budget two years ago. As the only branch of government with the constitutional authority to appropriate money, it is our duty to do so. While we are not aware of any of the governor’s requests, we welcome his early submission and are hopeful that it includes information that we have asked for over the past several months.”

Beshear said he’s already met with GOP leaders of both legislative chambers and believes his office will have a “significant number” of meetings with lawmakers as a budget is crafted. During the last budget cycle, Beshear said he had numerous meetings with the state Senate and was able to have “more in-depth conversations” on the upcoming budget with the Senate. 

The budget doesn’t use any of the state’s record $3.7 billion balance of its Budget Reserve Trust Fund, also known as the “rainy day” fund. A coalition of about 40 groups is calling on the state to use recurring revenue in the rainy day fund to pay for neglected needs in education, infrastructure and more. 

“If the General Assembly decides though, based on actuarial studies, that they want to invest some of that money, depending on what they suggest I can be supportive of that,” Beshear said. “It has plenty of money for any unforeseen circumstance that we would face.” 

Here are the major highlights of what Beshear is calling for.

Education: pay raises, more SEEK funding, helping universities

Beshear campaigned on giving an across-the-board 11% raise for all Kentucky school personeel, something that’s mentioned first in a descriptive “budget in brief” booklet handed to reporters at the Monday morning briefing. 

Beshear is seeking an additional approximately $1.1 billion over two years to be allocated for SEEK, a formula used to funnel money to school districts known as Support Education Excellence in Kentucky. The governor’s office said the new funding would improve starting pay for Kentucky’s teachers from 44th to 24th in the country, based on National Education Association reports. 

“The allocations to school districts are within the SEEK budget, but they are not allocated through the SEEK formula funding — which guarantees enough money for every school district,” the budget booklet states. 

The General Assembly in its 2022 budget had boosted funding to SEEK to be provided to school districts through the mechanism’s formula, though some have criticized that disparities in funding through the formula has widened the gap between wealthy and poor school districts.

As a part of the across-the-board raise, Beshear’s budget would also increase school funding provided through the SEEK formula with a $240.6 million infusion, representing a 4% increase of funding per pupil. The base funding per pupil provided through SEEK in fiscal year 2024 is $4,200; Beshear’s budget would increase that to $4,368. 

The budget would also increase SEEK funding for school transportation with $124.4 million annually to “fully fund school district costs for pupil transportation,” something the budget document asserts school districts haven’t received since 2004. 

The budget’s public education proposals also include: 

  • $344 million over two years to fund universal preschool for all 4-year-old children, which the governor’s office says could allow 34,000 new 4-year-old children to have preschool education
  • $427.1 million over two years would fund pension and retiree medical benefits for teachers; $284.6 million over two years would cover any health insurance premium increases for school employees 
  • $150 million for a fund pool to cover cost overruns for local school district construction projects
  • $100 million for a fund pool for community and technical colleges to make renovations, adding onto other funds make available in past budgets 
  • An 8% increase in base funding to public universities, representing $138.9 million over two years to make up for the “hollowing out of state funds from past budget cuts.” 
  • $400 million in bonded funds to address “deferred maintenance” at public universities, and $142.7 million in bonded funds to allow for new construction at universities
  • $49.3 million to establish three new student loan forgiveness programs to address worker shortages in “public service areas” such as for social workers, teachers and more
Source: Gov. Andy Beshear budget briefing

More law enforcement raises and new juvenile detention centers 

Beshear’s other budget-related campaign promises included raises for law enforcement, which is also reflected in his budget proposal. 

The budget booklet states that a $15,000 raise given to Kentucky State Police troopers through the 2022 state budget increased the number of troopers to 1,007 following an “unprecedented shortage” in the statewide police force. 

Beshear’s proposed budget would build on that, through a boost of $22.4 million over two years, by giving an additional $2,500 in trooper pay in fiscal year 2025 followed by “an inflationary increase” in fiscal year 2026. This would result, according to the booklet, in setting starting KSP trooper pay at $68,621. 

Beshear also proposes $32.8 million over two years to allow the hiring of 150 additional KSP  troopers. 

The governor is seeking $90 million in bonded funds to build two new female-only juvenile detention centers, one in Fayette County and another in Western Kentucky. Other bonded funds would go toward retrofitting existing juvenile detention centers in Breathitt County, McCracken County and Jefferson County. 

“Most of the retrofit projects are necessary to ensure safe segregation of male high-level offenders from male low-level offenders,” the budget booklet stated. “These facility plans, in combination with increased staffing enabled by raising correction officer salaries, once completed, will permit a safe return to a regional model that continues to detain female offenders in separate facilities.” 

The Kentucky Department of Juvenile Justice has faced scrutiny throughout the year due to chronic staffing shortages at detention centers and reports of violence at these centers. 

Budget proposals for law enforcement and state-run corrections also include: 

  • $7.8 million over two years to promote the Kentucky Department of Juvenile Justice’s services to put youth in other places besides the detention centers, which could support about 450 additional alternative placements “to keep more youth out of detention” 
  • Renovate an “existing facility” at one of the state’s psychiatric hospitals to create a site for psychiatric treatment for detained youth needing mental health services 
  • $4.2 million over two years to deal with a “backlog in demand” for substance abuse programs in state prisons and jails, which would expand treatment services 
  • $5.5 million over two years to training services for those leaving incarceration
  •  $35 million for a grant program to provide first responders and local enforcement with body armor
  • $146.1 million in bonded funds to build a regional training center for law enforcement in Western Kentucky

Funding Medicaid, more social workers

Throughout the Beshear budget are proposals for state funding to fill in gaps where federal funding paid for services during the pandemic, including covering the costs of the state’s expanded Medicaid program. Behind public education funding, spending on Medicaid makes up the second largest expenditure in the overall budget proposal at 29.1%.

The federal government offered enhanced funding for Medicaid to states in exchange for Medicaid recipients being allowed to stay enrolled in Medicaid during the COVID-19 pandemic. 

That enhanced funding is now expiring, and the governor’s budget proposal states an additional $395 million from the General Fund will be needed to ensure Kentucky can now meet its “higher portion” of funding Medicaid. 

Beshear also is seeking $455 million over two years to readjust financial reimbursements nursing homes receive from Medicaid. 

The governor’s budget proposal also asks for funding to hire 100 more social workers to reduce the average caseload each state social worker deals with, estimating that the new staff would lower caseloads from 19 to 17. 

Other health care and public health-related budget proposals include: 

  • $185 million in bonded funds to expand the state’s public health laboratory, which according to the budget booklet, has “serious structural and safety issues.”
  • Establishing the Office of Medical Cannabis to implement the state law that legalized medical marijuana.
  • $41.2 million over two years to fund mobile crisis intervention services throughout the state, which try to divert people in a mental health crisis “from the emergency room or from jail and provide appropriate medical services.” 
  • $19.6 million over two years to go toward a rate increase for state-run foster homes, the first since 2016.
  • $20 million over two years to ensure no waitlist for meals for senior citizens throughout the state.

Economic development, workforce, infrastructure and parks 

The budget also invests significant resources into continuing economic development efforts and building on infrastructure investments that were a major plank of Beshear’s reelection campaign. 

The governor’s budget proposal asks for $500 million in fiscal year 2025 to continue investing into local water and wastewater infrastructure through grants, in which rural water districts in particular have struggled to maintain aging pipelines, treatment plants and more. Federal funding from the American Rescue Plan Act had previously provided for such water infrastructure grants.

Beshear’s budget also calls for a “historic” investment of $300 million of one-time funds to compete for federal funding that would go toward major transportation projects, in particular the I-69 bridge over the Ohio River in Henderson and completing the Mountain Parkway in Eastern Kentucky. 

“These funds give Kentucky an improved prospect at leveraging new federal funding” from the Bipartisan Infrastructure Law, the budget booklet states. 

Another $50 million would go toward improving and replacing aging bridges overseen by counties and cities, $50 million to support the state’s 58 general aviation airports and nearly $600 million to maintain existing highways and bridges along major routes. 

The budget proposal also calls for putting $75 million into replenishing the Eastern Kentucky SAFE Fund — one of two funds established after natural disasters to help schools, utilities and local governments rebuild — which has been “exhausted” after the legislature had previously allocated over $125 million into the fund. 

Other proposed investments into economic development, infrastructure and workforce: 

  • $100 million provided in fiscal year 2025 to “support approved mega projects,” such as locating the Ascend Elements electric vehicle battery recycling factory to Hopkinsville. 
  • $100 million for the Kentucky Product Development Initiative, which seeks to support local governments with acquiring economic development sites, due diligence studies and more. 
  • $15 million for a statewide marketing campaign to attract workforce talent to the state, geared toward specific regions of the state and their respective needs. 
  • $11.2 million to restore 90 staff positions in the Office of Unemployment Insurance that were eliminated in past budgets.
  • $1 million to launch an economic development office in South Korea targeting businesses interested in locating to Kentucky
  • $10 million to go to the Kentucky Housing Corporation’s Affordable Housing Trust Fund, the first investment in the fund in almost 20 years, according to the budget briefing.
  • $184 million in bonded funds to continue renovations and upgrades for Kentucky State Parks. 

More money for state employees, local governments 

The governor’s budget proposal also provides attention to state employees, which the budget booklet states haven’t seen any salary increases in 10 of the past 12 years. 

“Because of the lack of pay increases, new employees can make a similar salary as more senior employees,” the budget booklet states. 

The budget would provide an across the board salary raise of 6% for state employees that would go into effect in 2024 and another 4% raise effective in 2025. Beshear is also proposing creating a tiered salary increase, separate from the across-the-board raises, that would give state employees an additional raise based on how many years they’ve worked in state government. 

One-time funding of $100 millionwould also go toward a “13th check” in fiscal year 2025 to retired state employees a part state-run retirement systems, along with the budget fully funding the state’s contributions for retirement system plans. 

Other proposals for state employees and local governments include: 

  • $61.6 million over two years to cover any health insurance premium increases for state employees. 
  • Launching a student loan forgiveness program to improve retention of state employees.
  • $4 million over two years to local county property valuation administrators to hire more staff.
  • $100 million to help local governments have matching funds when applying for federal grants. 
  • Returning the entirety of state coal severance tax revenues to coal-producing countie.s

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Liam Niemeyer
Liam Niemeyer

Liam covers government and policy in Kentucky and its impacts throughout the Commonwealth for the Kentucky Lantern. He most recently spent four years reporting award-winning stories for WKMS Public Radio in Murray.