Commissioner's Newsletter
May 23, 2003
To: School Administrators
From: D. Kent King
Re: Additional Withholding Set for June State Aid Payment
Because of the continuing slump in state revenues this month, Governor Holden today ordered another withholding of funds for the current fiscal year. Because of his very limited options at this time, the governor directed the withholding of $28.1 million in aid for public schools. This amount will be deducted from the June payment of state aid. I realize this may have a serious impact on your school district, especially so late in the fiscal year. In addition, the governor ordered the withholding of another $9.4 million in aid for public higher education institutions.
The reduction in the June payment will be in addition to the $61.3 million in withholdings that were announced in late February and began to be reflected in the March payment. As with the earlier withholdings, we will apply the latest reductions to the June Basic Formula, Line 14, transportation, gifted and remedial reading payments. The proration factors for the Basic Formula and Line 14 are estimated to decrease to .972 (Lines 1A and 14A) and .922 (Lines 1B and 14B). The transportation, gifted and remedial reading allocations for 2002-03 are expected to decrease another 1.2%, approximately.
As you probably know, Governor Holden yesterday announced his intention to veto House Bill 2, the appropriations bill that includes the proposed budget for elementary and secondary education for the next school year (FY04). This week, the governor also vetoed the appropriations bills for the departments of Mental Health, Social Services, and Health and Senior Services. He will call the members of the legislature back to Jefferson City on June 2 for a special session to focus exclusively on resolving budget issues.
The governor has stated repeatedly that the proposed budget, as approved by the legislature, is out-of-balance by approximately $367 million. If this imbalance is not rectified – either through additional revenues (from a rapid turn-around in the economy or increased taxes), additional budget cuts, or both – I believe the governor will have no choice except to impose further and more severe budget withholdings in the new fiscal year (after July 1).
For all of these reasons, we again urge you to be extremely cautious in your planning and budgeting for next year.
If additional withholdings are required in FY04, we intend to continue the practice that we have used this year, of applying pro rata reductions to the Basic Formula and Line 14 payments, and also to the categorical payments of transportation, gifted and remedial reading aid.
The storm is not over. We will do our best to keep you informed about budget-related developments in Jefferson City.