The Kentucky Department of Education is predicting a “funding shortfall” of about $40 million in state support for local school districts.

In a weekly letter to colleagues released Tuesday afternoon, Education Commissioner Robbie Fletcher wrote that KDE is predicting the shortfall for funding in the 2024-25 academic year, after “a detailed review of preliminary data.” 

“KDE is currently tracking an estimated SEEK shortfall of $12 million for funding to public school districts provided in Kentucky statutes,” Fletcher wrote. “KDE estimates an additional shortfall of $28 million for funding to public school districts that is specifically conditioned on the availability of funds.” 

The SEEK formula, or Support Education Excellence in Kentucky, determines the amount of state funding to local school districts. The formula has a base per-pupil funding allocation, along with additional funding for factors like transportation costs or the number of students in a district who qualify for additional resources like special education, free or reduced-price lunch and English language assistance.

Fletcher wrote that a SEEK shortfall previously occurred four times between fiscal years 2010 and 2014. 

“Since the 2017 fiscal year, the Commonwealth’s SEEK budget included more funding than was ultimately payable to districts as required by the SEEK formula,” Fletcher said. “During the 2021 fiscal year, there was a $231,000 surplus in SEEK appropriations. During the last fiscal year, there was a $156.3 million surplus in SEEK appropriations.”

To determine estimated costs for each biennial state budget, KDE works with the Kentucky Office of the State Budget Director “to gather data projecting property values, public school enrollments and student special populations” as lawmakers consider the budget, Fletcher wrote. 

The state budget director’s office in November predicted that Kentucky’s general fund revenue will decline by $213 million or 1.4% in fiscal year 2025. Some Republican lawmakers have questioned the projections and noted that actual revenues are up a bit through the first five months of this fiscal year.

Fletcher added that KDE is currently working with the state budget director and chairs of the General Assembly’s Appropriations and Revenue committees, Republicans Rep. Jason Petrie and Sen. Chris McDaniel, “to explore funding options that may address this estimated shortfall and minimize impacts to Kentucky’s public schools.” 

Lawmakers met earlier this month to begin their 2025 legislative session and will return to Frankfort in February. The House already has approved a reduction in the state income tax rate from 4% to 3.5% and the Senate is expected to quickly follow suit.

“These shortfall numbers are only estimates now and are subject to change in the upcoming weeks as the department completes final SEEK calculations,” Fletcher said. “State law requires KDE to complete final SEEK calculations by March 1 of each year. KDE will provide information to school districts regarding the impact to individual districts as soon as those final calculations are complete. While we know this estimated shortfall is critical to our public schools, it is important to keep in mind that it represents 1.43% of our overall SEEK funding of $2.7 billion.” 

The SEEK formula was established by the Kentucky Education Reform Act of 1990, but questions around school funding have been raised recently.

Last week, students on the Kentucky Student Voice Team filed a lawsuit against the state for failing to provide “an adequate and equitable public education.” Among claims in their suit, the students say eroding state financial support for school districts has made the inequality gap even wider than it was before 1990. KSVT’s data came from sources such as KDE, the federal government, and a data analysis from the progressive think tank Kentucky Center for Economic Policy.

However, Republicans in Frankfort have argued they are funding schools at record-levels. At the Kentucky Chamber Day Dinner earlier this month, Republican House Speaker David Osborne criticized “people that have not provided one single, substantive, creative, thoughtful, intentional policy change to improve education” and said that “asking for more money is not big. Asking for more money is not bold. Asking for more money is just an ask — and it’s not working.” 

Kentucky has 171 public school districts.