Reports: KY education funding leaves annual shortfall of $1.3 billion for students

School funding in Kentucky has not kept pace with inflation in recent years, resulting in an annual statewide shortfall of $1.3 billion, according to new reports from a group of superintendents who lobby for public school funding.

The Council for Better Education, comprising superintendents from across Kentucky, released reports Monday to every public school district in the state.

The reports’ key finding: Since 2008, funding shortfalls have affected core aspects of education in Kentucky, including staffing, class sizes, student services and transportation, leaving local districts struggling to fill the gap despite increases in local tax contributions.

The reports come after a group of Kentucky students, including the Kentucky Student Voice Team, sued the state in January, claiming Kentucky has failed to fulfill its constitutional obligation to provide all students with an adequate and equitable public education.

The lawsuit, filed in Franklin Circuit Court, draws from a 1989 court decision that led to the Kentucky Education Reform Act, a landmark initiative that propelled the state’s schools from the bottom of national rankings to models of success.

To address funding inequities, the state adopted a formula-driven allocation model known as Support Education Excellence in Kentucky.

But advocates say the state’s funding of SEEK has failed to keep up with inflation for nearly two decades.

For example, if the state funded SEEK at 2008 levels adjusted for inflation, Fayette County Public Schools would have received an additional $76.3 million in state funding last school year, Tom Shelton, executive secretary for Council for Better Education, told the Herald-Leader on Monday.

According to the council, Kentucky’s SEEK base guarantee of $4,326 per student would need to exceed $5,743 to match the purchasing power it held in 2008.

School transportation is also underfunded, with the state covering just 74% of calculated costs in recent years, the council said.

The SEEK formula is working as designed to fairly distribute state money, council officials said in the release. The problem, they say, is that the total amount that’s allocated is too small.

“It fairly distributes the funding that is provided. However, the issue is not the formula itself; it is the lack of adequate state funding being placed into the formula.”

Legislative leaders respond

Dustin R. Isaacs, Deputy Communications Director in the state Senate President’s Office, said the Council for Better Education’s report presents a narrow view of Kentucky’s public education funding by omitting billions in state-paid pension and health insurance contributions. The funds, totaling nearly $2 billion extra per year, are reported to the U.S. Department of Education’s National Center for Education Statistics, Isaacs said.

“These contributions are a foundational part of the state’s investment in public education. Excluding that critical context fails to provide a complete or accurate picture of Kentucky’s support for students and teachers,” he said.

“Furthermore, the Kentucky General Assembly enacted a budget that provided record SEEK funding, increased the per-pupil base guarantee, restored transportation funding, and boosted resources for low-wealth districts. Lawmakers have also prioritized school safety and advanced initiatives focused on the educator pipeline, loan forgiveness, professional development, and school innovation,” said Isaacs.

“Kentucky’s students and educators benefit from direct classroom support and long-term structural investments. That’s the whole story, which should be told with clarity,” he said.

Shelton said his group’s analysis is of SEEK funding, not of the pension.

SEEK is a current expense to operate public schools as opposed to the repayment of a liability as pension funding would be considered, Shelton said.

“ The pension funding is not included in the per pupil allocation in SEEK for schools in the state budget, and never has been,” he said. “The question should not be a funding of either / or as some want it to be, it should be a question of both / and. The money is there to do both currently with the surplus that exists. However, the General Assembly prefers to reduce the income tax rate instead of generating recurring revenue to fund all of the needs. This will continue to place a greater financial burden on local districts and property taxes.”

House Speaker David Osborne, R-Prospect, said since becoming the majority in 2016, the House has remained committed to improving educational opportunities for all Kentucky children.

“ This dedication is reflected not only in the historic levels of education funding we have provided — even when adjusted for inflation — but also in the policies we have enacted and the issues we continue to work on,” said Osborne. “ Knowing that SEEK has not changed in decades, we have an active group looking at ways to reform it to make it more effective and efficient. We have demonstrated both the resolve and the willingness to invest resources in our students’ futures, and we stand ready to do even more. “

“We urge local school districts to join us in pursuing real, results - driven policies that will benefit Kentucky’s children now and for generations,” he said.

“This hurts our most vulnerable students most of all,” Shelton said about the lack of adequate funding. “Local school districts have continually tried to make up the shortfall by raising local property taxes to a level that local residents are currently funding the majority of public school expenditures rather than the state, as is required by our Constitution.”

The Council for Better Education. formed in 1984, was started by a group of 28 superintendents from property-poor districts and other education advocates who were frustrated by the legislature’s failure to fund the state’s schools, its website says.

This story was originally published June 24, 2025 at 9:54 AM.