Kansas Budget Stabilization Fund

Dylan Dear
Managing Fiscal Analyst

Amy Deckard
Assistant Director for Fiscal Affairs

Various laws and statutory sections are designed to provide certain safeguards with respect to state budgeting and management of expenditures and to prevent deficit financing. The most recent measure taken by the Legislature is the creation of the Budget Stabilization Fund.

The Fund is intended to receive revenues when receipts exceed expectations and conserve them for periods of economic recession.

Budget Stabilization Fund

The 2016 Legislature in HB 2739 established the Budget Stabilization Fund. The Legislative Budget Committee was statutorily charged in KSA 75-6706 with developing and recommending a method to fund the Budget Stabilization Fund based on a review of risk-based practices used by other states, relative annual variance from revenue and expenditure estimates, and the circumstances upon which the funds may be expended.

In FY 2020, 50.0 percent of the amount that State General Fund (SGF) receipts exceeded the consensus revenue estimates were transferred from the SGF to the Budget Stabilization Fund, totaling $81.9 million.

Various other provisions including the transfer of 10.0 percent of the unencumbered ending balance and transfers to the Kansas Public Employees Retirement System were briefly enacted into law but suspended prior to application.

The Governor recommended that the balance of the Budget Stabilization Fund be transferred into the SGF due to anticipated shortfall in revenue due to the COVID-19 pandemic. Despite the fact that the shortfalls were not realized, the funds were transferred to the SGF via act of appropriation in FY 2022. The Governor also recommended suspending transfers from the SGF to the Budget Stabilization Fund for FY 2021.

The balance of the Budget Stabilization Fund at the beginning of FY 2022 was zero. The Legislature transferred $500.0 million from the SGF to the Budget Stabilization Fund in House Sub. for Sub. for SB 267, and an additional $250.0 million in HB 2510, for a total of $750.0 million in legislatively directed revenue transfers in FY 2022.

In addition to these transfers, actual SGF receipts in FY 2022 exceeded consensus revenue estimate projections by $438.1 million. These excess receipts resulted in a transfer of $219.1 million (half the total excess) at the end of FY 2022.

Transfers from the SGF to the Budget Stabilization Fund for FY 2022 total $969.1 million. Additionally, the Budget Stabilization Fund retains the interest based on the average daily balance rate as certified by the Pooled Money Investment Board, and is growing at a rate of approximately $1.0 million per month. The balance in the fund at the beginning of September 2022 was $971.7 million.

The Budget Stabilization Fund can be expended solely by an act of appropriation by the Legislature or the State Finance Council as an act of legislative delegation. The Budget Stabilization Fund shall not be considered as part of the ending balance of the SGF for compliance with allotments. The Budget Stabilization Fund is otherwise considered part of the SGF ending balance.