FRANKFORT, Ky. (KT) – The Kentucky House passed legislation to put money into an emergency loan fund that could be used by school districts struggling because of declines in tax collections.
House members voted 85-2 Friday to overwhelmingly send the bill to the Senate.
Rep. John “Bam” Carney, R-Campbellsville, sponsor of HB 141, said he introduced the bill to aid those districts affected by loss of funding that has led to 10 or 15 school districts facing significant financial situations.
Carney said the program is already in statute as the Emergency Revolving School Loan Fund Account but has never been funded.
“This would set up $7,000,000 fund, that school district could apply for loans from, with a maximum $500,000, which must be repaid within five years,” he said.
Rep. John Blanton, R-Salyersville, said several of his local districts are in dire financial straits and could benefit from the measure.
“The Knott County school system, when the recalculation of the unmined mineral tax took place last year, suffered a $1.2 million loss in the middle of the school year budget. That’s a hard loss for a school district the size of Knott County.”
Blanton said the Knott County school system, without some kind of financial assistance, will have to close in April. Several districts in the coal regions, both on the eastern and western half of the state, have had declining tax collection funding.
“Can we imagine allowing one of our public school systems to shut its doors?” Blanton also said Pike County lost $3 million over the last two years from its budget.
Rep. Rick Rand, D-Bedford warned his colleagues that many public school systems are facing dire consequences.
“I’ve read reports that there are around 19 districts that can’t finish the fiscal year, can’t meet the payroll, without help. That’s over 10 percent of our districts. If we pass the budget bill proposed by the governor, there are going to be a lot of districts back here next year, asking us to bail them out.”
State education officials would run the loan program. Money would come from excess funds from the state's main funding formula for public education.
An amendment proposed by Rep. Lynn Bechler, R-Marion, would limit districts to one loan in five years, even if they repaid an earlier loan. That failed on a 57-18 roll call vote.
HB 141 contains an emergency clause, so if it passes the Senate, it would become effective as soon as it is signed by Gov. Matt Bevin.