From MSBA's Legislative Voice: Fiscal Year 2027 Passes, MSBA Spearheads Last-minute Formula Fix Last Week
Last week, the House and Senate Budget Conferees met Monday afternoon and, after more than seven hours of negotiations, finalized an agreement on the Fiscal Year 2027 operating budget. Governor Mike Kehoe initially proposed a $54.5 billion budget in January. The House later approved a $52.4 billion version in March, while the Senate advanced a leaner $50.8 billion proposal in April. The final agreement includes approximately $16 billion in General Revenue spending and relies on roughly $2.9 billion in surplus revenues accumulated since 2021. Although many negotiations occurred behind closed doors, several major spending items prompted lengthy public debate among conferees.
Arguably the most heated debate focused on the Foundation Formula. Ultimately, the legislature agreed to $4,282,736,000 for the formula, approximately $190 million below full funding. Throughout the budget the appropriated number for the formula remained constant, but the underlying funding sources used to support the formula were altered. On Monday evening DESE staff determined that during these funding source changes the conference committee had over appropriated available funding from some of the one-time sources. It was quickly determined that this was not the intent of the Senate committee, but allegedly House Budget Chairman Dirk Deaton (R- District 159) was aware of the issue during conference committee. The funding in question was around $118 million, with the projected deficit around $60 million.
MSBA’s lobbying team immediately set to work to identify funding sources to fix this issue and shepherd a solution through the legislature. Working late into the evening Tuesday and through the day Wednesday, MSBA’s team was able to identify $27 million in additional Blind Pension funding, and an estimated $20 million in funding projected to be unexpended from Covid-era funding. Since the Conference Committee Reports for House Bill 2002 were already signed and the Conference Committee adjourned, your MSBA team identified a solution to put these funds into House Bill 2020, which had not yet been passed. Working with Senate Appropriations Chairman Rusty Black, who apologized profusely for the issue and worked diligently on a solution, the MSBA team was successful in securing the funding. Additionally, there is a commitment from Governor Kehoe that he will not withhold or veto funding from the Foundation Formula or Transportation categorical, and will let up to $16 million in additional Covid-era money that is unexpended flow through to the formula until intent of the budget is fulfilled.
It is disappointing to not have a fully-funded formula for the first time in roughly a decade. That being said, this year and next year are challenging fiscal years for the state. MSBA will continue to fight for full funding, but we encourage you to work with your district leadership on the likelihood of budgets that do not project additional state support in the near future. The combined budget package totals approximately $55.1 billion and now heads to Governor Kehoe for review and final action before the fiscal year begins July 1.
Foundation Formula: $4,282,736,000 ($190+ million short of fully funded)
$47 million+ in funding located in HB 2020
Transportation Categorical: $376,575,449
Small Schools Grant: $30,000,000
Career Ladder: $52,546,168
Baseline Teacher Salary Grant: $33,421,374
School Safety Funding: $1,000,000
Missouri Empowerment Scholarship (school vouchers): $60,000,000