Introduction to State Budget

Budget Overview

This report provides background information on the state budget process, including definitions of classifications of expenditures by function of government and by major purpose of expenditure.

Information about the approved fiscal year (FY) 2020 and FY 2021 budgets also are included, as well as general information on the status of the State General Fund (SGF).

The Budget Process

The Kansas budget is an executive budget in that the budgetary recommendations of the Governor are embodied in the appropriation bills, which are introduced and considered by the Legislature.

• Most state agencies are required by law to submit their budget requests no later than October 1 of each year (customarily, the deadline specified by the Director of the Budget is September 15). Agency budget requests are submitted to the Division of the Budget and the Kansas Legislative Research Department (KLRD) at the same time.
  • Nineteen state agencies, most of them occupational and professional licensing boards and financial institution regulatory agencies, are “biennial budget agencies” and are authorized to file budget adjustment requests every other year.
• The Director of the Budget (Director), an appointee of the Governor, is directed by law to review the detailed requests submitted by the various state agencies and to make initial recommendations that are transmitted to agencies in November. Agencies are then authorized to appeal those initial recommendations to the Governor. By law, judicial branch agency budgets are exempt from review by the Director. By practice, legislative branch agency budgets are not reviewed.
• The Governor then makes budgetary recommendations, which are provided to the Legislature at the beginning of each legislative session. The Governor’s recommendations also are included in appropriations bills, which become the Legislature’s base for approving the budget each year.
• At the discretion of the Governor, a budget cycle may include two budget years. In the first year of a two-year cycle, the agency requests and the Governor recommends a current year budget and two budget years. In the second year, the Governor’s recommendation includes the current year and a budget year with the approved amount from the first year’s legislation. In this case, the Governor’s recommendation reflects only changes from the previously approved budget year amount. This distinction changes the comparison made in the Budget Analysis and the changes made to the appropriations bill(s).
• KLRD prepares an analysis of both the budget request made by each agency and the Governor’s recommendations, which is submitted to the Legislature approximately three weeks after the Director submits the Governor’s Budget Report.
• Agencies’ budgets receive simultaneous consideration in the House Committee on Appropriations and the Senate Committee on Ways and Means. Identical appropriation bills reflecting the Governor’s recommendation are introduced in both chambers.
  • Consideration by the first chamber. The chairpersons of the House Committee on Appropriations and the Senate Committee on Ways and Means appoint budget committees (House) or subcommittees (Senate) to consider appropriations for various agencies.
• After reviewing the budget requests, the budget committees and subcommittees draft a report that details all budgetary adjustments to the Governor’s recommendations the budget committee or subcommittee supports. Once the report is prepared, it is presented to the corresponding full committee.
• The committee may adjust the recommendations or it may adopt the report as submitted. The recommendations of the committee are considered by the full chamber, which also may adjust (through floor amendments) or adopt the recommendations.
  • Consideration by the second chamber. The process for review of an appropriations bill in the second chamber repeats the steps followed in the chamber of origin.
  • Conference committee action. After consideration of an appropriations bill by the second chamber, the bill typically goes to a conference committee to reconcile differences between the House and Senate versions of the bill.
  • Omnibus Appropriations Bill. The Legislature usually adjourns its regular session sometime in early April and returns for a wrap-up session that occurs roughly two-and-one-half weeks following the first adjournment. During the wrap-up session, the Legislature takes action on a number of items of unfinished business. One of these is the Omnibus Appropriations Bill. It is designed to make technical adjustments to the appropriations bills passed earlier in the session and to address the fiscal impact of legislation passed during the session. The Omnibus Appropriations Bill is usually one of the last bills passed each session.
• Classifications of state spending. The State of Kansas classifies state spending by major purpose of expenditure and by function of government.

Major purposes of expenditure include the following:

• State Operations. Actual agency operating costs for salaries and wages, contractual services, commodities, and capital outlay.
• Aid to Local Units. Aid payments to counties, cities, school districts, and other local government entities.
• Other Assistance, Grants, and Benefits. Payments made to or on behalf of individuals as aid, including public assistance benefits, unemployment benefits, and tuition grants.
• Capital Improvements. Cash or debt service payments for projects involving new construction, remodeling and additions, rehabilitation and repair, razing, and the principal portion of debt service for a capital expense.

Expenditures by function of government are grouped by agencies that make expenditures for similar programs and purposes. There are six functions of government:

• General Government. State agencies with both administrative and regulatory functions, including statewide elected officials, the legislative and judicial branches, and fee-funded professional and regulatory licensing agencies.
• Human Services. Agencies that provide services to individuals, including the Department for Aging and Disability Services and state hospitals, the Department for Children and Families, the Department of Labor, the health portions of the Department of Health and Environment, and the Commission on Veterans’ Affairs Office.
• Education. Agencies that provide various educational services to Kansans, including the Department of Education, the Kansas Board of Regents and the Regents Institutions, the State Library, the State Historical Society, and the Schools for the Blind and the Deaf.
• Public Safety. Agencies that ensure the safety and security of citizens, including the Department of Corrections and its facilities, the Highway Patrol, and the Kansas Bureau of Investigation.
• Agriculture and Natural Resources. Agencies that protect the natural and physical resources of the state, including the Department of Agriculture, the environment portion of the Department of Health and Environment, and the Department of Wildlife, Parks and Tourism.
• Transportation. This function includes only the Department of Transportation.

The following illustration reflects approved FY 2021 SGF expenditures by function of government.

Consensus Revenue Estimating Process

Since 1974, a consensus approach involving the legislative and executive branches (Division of the Budget, KLRD, the Department of Revenue, and one consulting economist each from the University of Kansas, Kansas State University, and Wichita State University) has been utilized for estimating revenues to the SGF. These consensus estimates are used by both the Governor and the Legislature to formulate and approve budget requests. The law requires on or before December 4 and April 20, the Director of the Budget and the Director of Legislative Research to prepare a joint estimate of revenue to the SGF for the current and ensuing fiscal year. The following table reflects actual SGF receipts (in millions) for FY 2019 and the April 2020 estimate, as adjusted for legislation, of the Consensus Revenue Estimating Group for FY 2020 and FY 2021.

	Actual FY 2019	Estimated FY 2020	Estimated FY 2021
Income Taxes	4,241.80	3,690.00	4,188.00
Excise Taxes	3,043.30	3,003.30	2,999.10
Other Taxes	186.20	192.1	196.4
Other Revenue	-102.90	-60.2	-153
Total	7,368.40	6,825.20	7,230.50

SGF revenue sources include:

• Income taxes include individual and corporate income and financial institutions taxes.
• Excise taxes include sales and compensating use taxes, alcohol and cigarette taxes, and severance taxes.
• Other taxes include motor carrier property taxes, estate and succession taxes, and insurance premium taxes.
• Other revenue includes interest earnings, agency earnings, and net transfers to and from the SGF.

The following tables reflect where an SGF dollar is projected to come from in FY 2021 and how it will be spent.

Where Each FY 2021 SGF Dollar Comes From
(Dollars in Thousands)

52¢	Individual Income Tax	3,770,000
38¢	Sales and Compensating Use Tax	2,770,000
5¢	Corporation Income Tax	370,000
2¢	Insurance Premium Tax	172,500
1¢	Alcohol Taxes	106,000
2¢	Tobacco Taxes	116,000
0¢	Severance Tax	7,100
-1¢	Other Taxes and Revenue	-81,100
$1	Total Receipts	$7,230,500

Where Each FY 2021 SGF Dollar Will Be Spent
(Dollars in Thousands)

51¢	Department of Education	4,102,700
11¢	Board of Regents/Postsecondary Education	869,806
0¢	Other Education	24,422
62¢	Subtotal – Education	4,996,927
13¢	Department for Aging and Disability Services and Hospitals	1,004,758
10¢	Department of Health and Environment – Health	812,275
5¢	Corrections and Facilities	427,074
4¢	Department for Children and Families	349,523
2¢	Department of Administration	136,853
1¢	Judicial Branch	112,057
0¢	Board of Indigents’ Defense Services	34,994
0¢	Legislative Agencies	33,223
0¢	Highway Patrol and KBI	27,633
1¢	All Other	88,740
$1	Total Expenditures	$8,024,057