Kentucky education officials report $14.7 million SEEK shortfall, urge close monitoring

FRANKFORT, Ky. (Feb. 11, 2025)

Kentucky Department of Education Commissioner Robert L. Fletcher told the House Budget Review Subcommittee on Primary and Secondary Education and Workforce Development that KDE's SEEK (Support Education Excellence in Kentucky) final estimate for fiscal year 2025 shows a $14.7 million statutorily required shortfall and about $40.5 million when including items listed in budget language "if funds are available." "This is a separate conversation. This is about how we come up with that number for SEEK that goes in the budget," Fletcher said, adding the SEEK estimate is a "very sophisticated modeling process."

The shortfall, Fletcher and KDE staff said, results from several factors that were underestimated in the fall 2023 projections used to build the budget. KDE's presentation to the committee cited larger-than-expected student growth in some districts, steep increases in exceptional-child (special education) counts, and swings in property value assessments as leading contributors to the gap. "I think in the, over history, I think it's been a shortfall 5 times. And I think this year, we find ourselves in about a 14,700,000.0 dollar shortfall," Fletcher said.

KDE officials emphasized the SEEK figure they presented is a net number that reflects both required payments and additional items that budget language says should be paid if funds are available. Matt Ross, KDE associate commissioner for finance and operations, and Che Ritter, division director for district support, described the multi-step, consensus-driven modeling process KDE uses with the Office of State Budget Director to project inputs such as property assessments, average daily attendance, free-lunch counts (poverty), exceptional-child counts and limited-English-proficiency students. KDE said the overall SEEK pocket referenced in the budget is about $2.8 billion; the broader set of K'12 spending in the budget bill is roughly $3.2 billion in the same section, and total K'12 spending including local effort and other funds is about $11 billion.

KDE gave examples of specific drivers committee members pressed on. The department said it underestimated systemwide exceptional-child counts; the presentation noted a $22.1 million gap on that input alone and that the severe (low-incidence) special-education population has grown and carries a higher weighting in the formula. KDE also said it underestimated English-language-learner counts and that the system missed roughly 8,000 early-opportunity/early-learning (EOL) students in its projection. Commissioner Fletcher said KDE and the state budget office conduct the projection work in the fall of the prior year, so the 2025 estimate used 2023-era modeling inputs.

Committee member Representative Tina Bogdanowski asked about the role of a virtual school in Cloverport Independent, saying the district's growth was larger than expected. KDE replied it had budgeted growth of about 500 students for the district but the district recorded about 2,066 growth and "if you look at their growth by itself, they're entitled to $11,700,000 in growth alone." KDE staff confirmed a large portion of those payments flow to the district's contracted for-profit operator under the district's contract.

KDE staff described how budget language that allows transfers between budget units can soften the practical impact of a SEEK shortfall and said the department regularly uses that flexibility to avoid abrupt cuts for districts. The department also noted that if SEEK projections yield an excess (as in prior years), budget language governs where returned funds are directed'commonly the Budget Reserve Trust Fund or other earmarks in the enacted budget.

KDE said the SEEK calculation is statutorily due March 1 and that, at the time of the presentation, KDE planned to provide a formal number to legislative staff that day or shortly thereafter. The department warned that the figure of roughly $40.6 million that includes "if funds are available" items could change if January growth data increase, though KDE's presenters said they did not expect a large January growth change.

Committee members pressed KDE on improving early detection and district monitoring of climbing special-education counts. Fletcher and staff said KDE is scheduling follow-up calls with larger districts (including Jefferson County Public Schools, Boone, Kenton, Campbell and Fayette) to better understand district-specific drivers and to review monitoring and identification processes. "We need to understand, I think, like you said, on the front end," Che Ritter said, describing planned follow-up with districts and KDE program offices.

KDE officials repeatedly framed SEEK as an inherently uncertain, consensus-oriented forecast that relies on models maintained by the Office of State Budget Director. They credited the state budget office for close alignment on property assessment modeling (KDE said the budget office was within roughly 0.3 percent on assessments) while noting other inputs'particularly exceptional-child counts and unanticipated district-level growth'have driven recent shortfalls.

The committee did not take formal action on SEEK during the meeting. The subcommittee adjourned after the presentations and set its next meeting to hear the school facility assistant fund audit on Feb. 18.

What's next: KDE said it would provide its final SEEK estimate to legislative staff around the statutory March 1 deadline and pursue follow-up reviews with districts about special-education growth and identification procedures.