Kentucky Classrooms Cannot Afford to Have Resources Siphoned Away by Most Expensive Neo-Voucher Proposal Yet

All Kentucky children – living in poor and wealthy districts, black, brown and white, whose parents didn’t finish high school and that have advanced degrees – deserve a high-quality education that will equip them to contribute fully to their community and the state’s economy. The most efficient and effective way to invest state tax dollars toward that end is to adequately and equitably fund the state’s public schools.

But House Bill 350 (HB 350) and its companion bill in the Senate (SB 110) would siphon a large and growing amount of public resources through a tax break for donors to private schools, deepening the fiscal strain public schools are experiencing after a decade of state budget cuts.

Compared to previous versions of the proposal, this year’s bills are largely similar yet even more expensive, with a cost that could total as much as $1 billion over just 11 years. By providing no sunset date or ultimate cap on the program, costs would continue to grow over time, consuming an increasing share of resources that would otherwise be invested in public services through the state budget.

Rich tax break will be very costly for state and harm public schools

Direct public spending on private schools through vouchers is prohibited by Kentucky’s constitution. Accomplishing the same purpose through the tax code instead with an almost 100 percent tax credit seemingly circumvents this prohibition, which is why these programs, currently existing in 18 other states, are also called “back door vouchers” or “neo-vouchers.”

For donors of cash and marketable securities to private school scholarship granting organizations (SGOs), the proposed program would carve out a large tax break against individual, limited liability, corporate and bank franchise taxes. At 95 cents for every dollar of donations up to $1 million – increasing to 97 cents for multi-year donations – this incredibly rich tax break is 19 times bigger than the state’s charitable deduction for other kinds of giving, and would be the most generous tax credit offered in Kentucky. And it allows donors with less tax liability than tax credit to carry forward the unused portion for up to 5 years.

The cost of the tax break is capped at $25 million in the first year, and if 90 percent of that amount is utilized, the cap will grow by 25 percent the following year. It is very likely the full cap will be used because “donors” can ensure an almost complete return of the amount contributed due to the generosity of the credit. In addition, some donors may be able to even turn a profit from giving (described below). This large payback allows the individuals, businesses and financial institutions making the contributions to directly transfer public resources to private education at nearly no cost to themselves, or even to potential personal financial gain. A similarly-designed program in Florida is evidence that the fiscal impact of HB 350 would rapidly grow, putting extreme fiscal strain on the state budget and on state funding for public education.

While last year’s bill would have limited the overall General Fund impact to a still-unaffordable $209 million over the 6-year course of the tax credit, HB 350’s unrestricted time-frame could cost as much as $831 million over 10 years with the potential to scale up to a cumulative $8.6 billion over 20 years – and more thereafter.

Public resources will subsidize tuition for relatively well-off families

Though proponents suggest these tax breaks are a way to provide a private school option to families who would otherwise not be able to afford it, the proposal insufficiently targets low- or even moderate-income families.

  • Income eligibility for the scholarship is up to 200 percent of household income necessary for reduced-price meals. Reduced price meal eligibility is 185 percent of the federal poverty line (FPL) based on family size.
  • For a family of four, multiplying the FPL of $25,750 by 185 percent, and then by 200 percent yields $95,275.
  • That’s so generous a limit that 71% of Kentucky children age 18 and under would qualify.

Last year we debunked the national “EdChoice” advocates’ claim that a private school tax credit would save Kentucky money. The generous income eligibility criteria described above does not just undermine the stated purpose of providing private school access to families that otherwise couldn’t afford tuition, but it is also is a reason why proponents’ claim that the program would result in savings falls apart under scrutiny.

With the ability of students from relatively well-off families to participate, and with no requirement that recipients previously attend public schools, many families already paying or planning to pay for private schools would benefit from the scholarships. That means less resources for public schools without an equivalent reduction in the number of students public schools are responsible for educating. Testimony at the March 5, 2019 House Appropriations and Revenue Committee on last year’s bill came from parents who already had children in private school without the aid of a tax credit scholarship program. 

Compared to last year’s proposal, HB 350 also worsens the cost impact by increasing the share of first-time scholarships that can go to relatively well-off families who are more likely to send their kids to private schools even without the scholarship. The 2019 bill stipulated that the share of awards going to low-income, foster and students with special needs must equal 90% of the statewide share of students eligible for reduced price meals (which was 73% in 2019, for a total of 66%). Under HB 350, simply a majority (>50%) of first-time recipients must be in this targeted group.

Worse still, because of the way the proposal gives scholarship priority to past recipients and their siblings regardless of family incomes (which tend to grow), over time, better-off beneficiaries are likely to crowd out lower-income applicants. In other words, after year one of the program, scholarships are awarded first to students who received one the previous year and their siblings. Only if any money is left over does a share (>50%) go to students in need.

For those children who do leave public school to attend private school through the program, Kentucky educators and administrators testified at the same hearing in 2019 that limited savings resulting from having fewer students to educate would not offset the losses in state revenue; When enrollment declines, schools’ fixed and stranded costs remain the same. The bill will reduce General Fund resources overall, and reduce state payments to districts when enrollment declines.

Research supports cost concerns

Neovoucher advocates’ claim that public schools will come out ahead financially is supported almost exclusively by analyses done by Martin Lueken of Ed Choice, a national group in favor of private school tax breaks. In fact, last year Kentucky advocates of the bill shared a “fiscal impact statement” written by Lueken and crafted to look much like the LRC’s fiscal notes.

Lueken’s analysis is based on the idea that scholarships to private schools cost less per pupil than a public education, and looks at existing programs in other states to back up these claims. However, a closer examination by the National Education Policy Center at the University of Colorado reveals these claims are unsubstantiated based on problems related to whether students actually leave public for private schools and, in the cases that they do, whether districts are able to reduce their costs enough:

  • Hypothetical savings could only occur when students leave public schools to attend private schools. Lueken’s analysis assumes that 90% of Kentucky participants would switch from public to private schools but as described above, the program is insufficiently targeted to students who otherwise wouldn’t be able to afford tuition. Programs in other states that do not target low-income public school students end up instead serving families with kids already enrolled in private schools.
  • When a student does switch from a public to a private school and the public school loses its state allotment for that student, the public school may be able to reduce spending on certain variable costs related to the individual student (obviously, fixed costs on things like facilities, maintenance and debt service don’t go down). Lueken asserts these variable costs are reduced by more than state funding goes down without listing or explaining variable costs that are associated with individual student enrollment. Even if a high number of students were to switch, they would likely be disbursed across different schools and grades, making it much less likely that a district would be able to sufficiently reduce overall costs.

What this all means is that HB 350 will cost our public P-12 classrooms in two ways: schools are likely to lose more state funding than their costs are reduced when students switch from public to private schools, even while a large amount of tax revenue for public school funding will no longer be available because the program pays for the tuition of children who are already attending private school.

Program still allows “donors” to profit

As mentioned previously, the proposal would provide a credit of 95 or 97 cents for every dollar donated. By stacking their federal charitable deduction on top of the state credit, donors could recoup between 97% and 100% of their donation. As with previous private school tax credit proposals, HB 350 would also allow donors to make money from redirecting public resources to private schools. This would occur if they donate stocks and – in addition to the dollar for dollar credit – avoid capital gains taxes on the stock’s appreciated value.

HB 350 would create the richest tax break in Kentucky’s tax system, rewarding donors to private schools far beyond the charitable deduction for donations to churches and synagogues, domestic violence shelters, hospital charities, Habitat for Humanity, Girls’ and Boys’ Clubs and humane societies. It will greatly diminish the limited resources the state has to uphold its duty to efficiently provide an equal and high-quality education to all Kentucky kids. 

Kentucky Is 4th Worst in the Nation for Student Loan Default

New data shows Kentucky has the 4th highest student loan default rate in the nation. While the national rate of students missing payments on their loans for an extended period of time is 10.8 percent, Kentucky’s default rate is 14.3 percent (last year it was 14 percent and we ranked 9th worst). The only states with higher student loan default rates this year are West Virginia (17.7 percent), New Mexico (16.2 percent) and Nevada (15.3 percent).

What is the student loan default rate?

Each year in September the U.S. Department of Education publishes the official “three-year cohort default rates” (as defined below) for federal student loans by state, individual higher education institution and type of institution (i.e., for-profit, public four-year, etc.).

The default rate is calculated by determining – of the number of individuals whose student loans went into repayment in a given year (in the most recent data, in 2015) – the share that missed payments for at least nine consecutive months over the following three years (in this case in 2015, 2016 and 2017). So in 2015, 73,691 Kentuckians were scheduled to begin making payments on their student loans, and 10,570 (14.3 percent) missed payments for at least 9 consecutive months over the following three years.

The student loan default rate gives insight into the financial difficulties college students are facing after they leave school, some before earning a degree. College costs have skyrocketed while wages have not — and having a student loan in default can harm credit scores, making it difficult to get housing and transportation because a credit check is often involved.

Who is most likely to default?

Individuals with lower incomes and people of color often face the greatest barriers to student loan repayment. Those who borrow relatively small amounts are actually more likely to default rather than those with very high levels of debt. For Americans with loans entering repayment in 2011, for instance, 43 percent of those who defaulted owed less than $5,000; meanwhile, those with student debt greater than $20,000 made up just 6.2 percent of defaults.

Even small amounts of debt can become insurmountable when an individual is struggling to make ends meet, as so many Kentuckians are. It’s especially problematic that many of those unable to make payments on their student loans have had to leave college — often for financial reasons — before earning a degree which might have improved their economic opportunities. Data suggests whether a degree is completed (and the type of degree) is more predictive of whether or not a student will default on loans than how much is owed.

What does it mean that Kentucky is 4th worst?

Kentucky’s high student loan default rate reflects the state’s college affordability challenges including tuition increases largely driven by mounting state budget cuts, growing student debt, inadequate need-based financial aid and too-low rates of degree completion, especially for students with low incomes and students of color.

Southeast Kentucky Community and Technical College is 1 of 12 institutions in the nation with a student loan default rate of 30 percent or higher for three years in a row. This puts the institution at risk of losing at least some federal financial aid due to consistently high student loan default rates. Southeast KCTC was in the same situation last year but received a special waiver, which prevented the loss of federal aid, due to the severe economic challenges facing the students and communities it serves.

The new student loan default rate data does underscore the college affordability challenges — and economic challenges more generally — facing Kentuckians, but it does not tell the whole story. A separate, longitudinal set of student loan data analyzed at the national level earlier this year shows the student debt crisis is much worse than indicated by student loan default rates:

  • Just half of students beginning college in 1995-96 had paid off all their federal student loans 20 years later, and the average borrower in this group still owed approximately $10,000 in principal and interest (about half of what was originally borrowed).
  • While the official student loan default rate looks at the first three years after a loan enters repayment, many students end up defaulting after that — which means the student debt crisis is much worse than depicted by these numbers. More than half of students who defaulted within 20 years of beginning college were in repayment for more than 3 years before they defaulted (the average default was 4.9 years after entering repayment).
  • Student loan default may be accelerating. While a quarter of students who started college in 1996 defaulted within 20 years, a quarter of students who began college in 2003-04 defaulted in just 12 years.

It is also notable that those who use repayment options known as deferments or forbearances are not included in the default rate. These options enable borrowers to stop payments without going into delinquency or defaulting, and some colleges are aggressively pushing borrowers to utilize them, which reduces institutional accountability by making the official default rate lower than it otherwise would be. Loans in forbearance and often in deferment (but not always) continue to accrue interest, so an individual may not be “defaulting” but their student loan balance is actually growing, making it even more difficult to pay down.

What are the default rates of individual schools in Kentucky?

In keeping with national trends, the student loan default rates are higher at Kentucky’s community colleges than at the public universities, as seen in the tables below. Institutions serving a large share of students with low incomes and students of color typically have higher default rates.

Student loan default rates are also typically higher at for-profit institutions, but state-level data is only available for the for-profit institutions that are headquartered in a state — not for the state branch of a national chain.


Data on student loan defaults makes it clear the state needs to address the college affordability challenges facing Kentuckians. To put higher education within reach for all Kentuckians, we have proposed that the state provide the equivalent of two years of free community college to students attending public higher education institutions. Making college more affordable will help move our commonwealth forward.

Performance Funding for Higher Ed Already Beginning to Disadvantage Some Schools

New higher education data showing the allocation of performance funds in 2019 to our public universities and community colleges underscores the concern that some institutions are disadvantaged in the performance funding models. Smaller schools serving students with greater economic challenges will receive few if any of these dollars in 2019.

Round after round of state budget cuts to higher education, including an approximately 6 percent reduction in 2019, have impacted all institutions, leading to fewer programs, faculty and staff as well as tuition increases. Though Kentucky’s 2017 performance funding law did not require any state funding to our public universities and community colleges to be conditional in 2019, the 2018-2020 state budget included performance funds to be distributed for 2019 ($24.2 million for universities and $6.8 million for community colleges). These resources will help mitigate the 6 percent base funding cuts for some institutions while leaving others behind.

Lawmakers could have chosen to cut institutions less across the board instead of making them compete for funding based on inequitable metrics. Kentucky’s performance funding formulas (one for universities and one for community colleges) include student success outcomes such as degree completion as well as metrics related to volume such as the number of student credit hours earned. While additional weights are provided for low-income and underrepresented minority students in the models, we have argued they do not fully account for the ways that economic challenges erect barriers to meeting these goals. In the 2019 competition, community colleges with particularly disadvantaged populations, such as in the state’s economically distressed coalfields, will receive no additional funds: Big Sandy, Hazard, Henderson, Madisonville, Maysville and Southeast community and technical colleges.

Among our public universities, Morehead and Kentucky State — which have the largest percentage of undergraduates receiving a Pell grant (federal need-based financial aid) — are the losers, receiving no additional funds. Murray also receives very little additional funding. The table below shows how the performance funding impacts each public university’s state funding in 2019.

The state budget for higher education didn’t create any real winners given all public institutions had their base funding cut, but it did create losers when it distributed some additional funds through the performance funding formulas. Schools serving smaller, lower-income communities receive fewer needed resources in 2019 to help students reach their goals.

State Budget Cuts to Education Hurt Kentucky’s Classrooms and Kids

Click to view report as a PDF.

Education is crucial to Kentucky’s success. However, as the state legislature has been disinvesting in P-12 education over the past decade, it has forced school districts to make cuts that harm classrooms and kids. Through a survey of Kentucky’s school districts and review of other state data, this report provides a first comprehensive look at how these cuts have translated into fewer course offerings, reductions in school-based services, fewer staff and cuts in employee compensation, costs being passed along to parents, fewer instructional days and more.

While Kentucky lawmakers have attempted to protect education funding in some ways, indirect cuts to core funding and direct cuts to educational supports are taking a toll. Kentucky’s per-student, inflation-adjusted cuts to its core funding formula — SEEK (Support Education Excellence in Kentucky) — since 2008 are third worst in the nation for cuts to core formula funding for K-12 education. And state funding for textbooks, professional development and extended school services have been cut outright — by about 20 percent each since 2008 even before inflation is taken into account. There were even several years the state provided no funding for textbooks at all.

KCEP’s survey of Kentucky’s school districts provides more detailed information on the impacts of inadequate appropriations on districts. The sample of districts responding to the survey represents more than 74 percent of Kentucky students. The sample is also representative in terms of geography, district size and per-student property assessments (a measurement of district wealth). We also analyzed data from the Kentucky Department of Education (KDE).

The first section of this report provides context for districts’ funding challenges as well as examples of these challenges from survey responses: eroding state funding, a shift in responsibility from the state to local districts, additional fiscal strain caused by multiple factors and the overall importance of funding to improve educational outcomes.

The second part of the report draws on the survey and other data to categorize and detail the difficult budget decisions districts are facing as a result of the challenging funding environment. Even as they are increasing local tax effort to compensate for lagging state investment, many Kentucky school districts have had to reduce investment in staffing, student supports, enrichment opportunities, instructional resources and more. Ultimately, this erosion in services will harm educational outcomes and hinder our ability to build thriving communities across the commonwealth.

Click to view the press release about the report.

The Funding Gap Between Kentucky’s Poor and Wealthy School Districts Continues to Grow

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As a result of decreasing reliance on state funding for education and an increasing reliance on local school district resources, the gap in per-pupil funding between the state’s poorest and wealthiest districts is growing. This “equity gap” shrank dramatically in the 1990s after the Kentucky Education Reform Act (KERA) was passed. But since then, the trend has reversed and funding for Kentucky’s school districts has become less equitable, raising the same kinds of issues that prompted the filing of the lawsuit that resulted in the passage of KERA.

In 1989, in Rose v. Council for Better Education, the Kentucky Supreme Court held that the state had failed in its duty, put forth in Section 183 of the Constitution of Kentucky, to “provide for an efficient system of common schools.”1 One of the central tenets of the Rose decision was that the General Assembly must “provide equal educational opportunities to all Kentucky children.” The court explained:

The system of common schools must be adequately funded to achieve its goals…[and] must be substantially uniform throughout the state. Each child, every child, in this Commonwealth must be provided with an equal opportunity to have an adequate education. Equality is the key word here. The children of the poor and the children of the rich, the children who live in the poor districts and the children who live in the rich districts must be given the same opportunity and access to an adequate education. This obligation cannot be shifted to local counties and local school districts.

As a part of KERA, the Office of Education Accountability (OEA) was established and charged with monitoring funding equity among school districts (in addition to other responsibilities). OEA prepared and submitted a School Finance Report each year between 1992 and 2006, with the analysis going back to 1990. In 2006, the General Assembly amended the law to require the report only upon request by the legislative Education Assessment and Accountability Review Subcommittee.2 Since then, OEA has produced just one report with analysis through 2010, which was presented to the subcommittee in 2012.3

This analysis updates that report through 2016, focusing on one specific application of OEA’s quintile-based method – measuring the per-pupil state and local funding gap between the wealthiest districts and the poorest districts that each represent 20 percent of the student population. It provides strong evidence that Kentucky’s education funding continues to grow less equitable.

Kentucky’s Education Resource Gap Is Nearing Pre-KERA Levels

OEA has historically used a quintile-based analysis to examine the level of funding equity among school districts. As the graph below illustrates, the gap between the top and bottom quintiles is climbing back toward the level it was before KERA. Adjusted to 1990 dollars, in 2016 state and local funding per-pupil in the poorest Kentucky’s school districts was $1,399 less than in the wealthiest districts, compared to $1,558 in 1990.4 In current dollars, the gap in state and local funding between students in the top and bottom quintiles in 2016 was $2,570.

As a share of total funding for the poorest schools, this gap is not as close to pre-KERA levels as the dollar size shown above, but still headed in that direction. In 1990, the gap in funding between the top and bottom quintiles was equal to 58 percent of state and local funds for the bottom quintile. That share fell to 14 percent by 1997 but has been creeping back up since. In 2016, the gap was almost a third of the bottom quintile’s state and local funds – 31 percent.

OEA’s 2012 analysis looked at the school funding equity gap from a number of angles, including the aggregate equity gap between the wealthiest and each of the other four quintiles, the Gini coefficient and coefficient of variation equity measurements, and with and without on-behalf funding.5 Those different methods all pointed to the same conclusions. In OEA’s words: “while the magnitude of the equity gap varies depending on the method used, all methods consistently show that the equity gap for local and state (combined) revenue has been widening in recent years.”6

Attempting to update each of OEA’s analyses is beyond the scope of this report. However, we did also look separately at the impact of on-behalf funds on school funding equity in 2016. These substantial state resources – $1.3 billion in 2016 – pay for teacher pensions, vocational training and health and life insurance.7 On-behalf funds are not included in the graph above because they have been reported inconsistently over the time period. However, including on-behalf funds using KDE data available more recently and OEA’s 2012 analysis does not mitigate the trend identified in the graph. The total state and local per-pupil funding gap between the 1st and 5th quintiles is widening when on-behalf funds are included — from $2,075 in 2010 according to OEA to $2,625 in 2016 according to KCEP’s analysis (both figures in 2016 dollars).8

Relative to the equity gap that doesn’t include on-behalf funds, OEA found that in 2010 on-behalf funds slightly narrowed the gap in per-pupil funding between the poorest and wealthiest quintiles by $192 (in 2016 dollars). But since then, on-behalf funds have grown more per-pupil in the wealthiest quintile of districts than in the poorest quintile; our analysis shows that on-behalf funds slightly widened the gap in 2016 by $55. Unlike state SEEK funds, state on-behalf funds have little to no equalizing effect on total district resources.9

Mechanisms that Improved Equity Under KERA Rely on Adequate State SEEK Funding

In Rose v. Council for Better Education, the Kentucky Supreme Court was clear that achieving equity would require new revenue – the General Assembly could not just reallocate already inadequate resources. In 1990, legislators responded by passing KERA (HB 940) which – in addition to reforming academic expectations, performance measurement, local decision-making, teacher development, oversight and accountability, wraparound services for students and more – improved funding adequacy and equity.10 The new core funding formula, Support Education Excellence in Kentucky (SEEK), guaranteed a minimum amount of funding per student and established a formula that divides the responsibility between school districts and the state, taking into account district property wealth – or lack thereof.

Through state level tax changes, the legislature raised an estimated $1.3 billion in new revenues for the General Fund over two years, with the vast majority going to education (SEEK and non-SEEK).11 These measures included, in order of their revenue-positive fiscal impact:

  • Getting rid of several individual income tax deductions by conforming to the federal tax code, as well as eliminating the state deduction for federal income taxes paid.
  • Increasing the sales tax rate from 5 percent to 6 percent.
  • Increasing corporate income tax rates by one percentage point, bringing the top rate to 8.25 percent.12

Under the KERA funding formula, local districts are required to levy, through a combination of property, motor vehicle and permissive taxes, a minimum of 30 cents per $100 of assessed property to participate in the SEEK program.13 SEEK funds are distributed on a per-pupil basis, and the amount generated locally is equalized by the state to match the guaranteed SEEK base, which is established by the General Assembly in the biennial budget.14 This formula means local districts with the wealth to generate more revenue receive fewer state dollars, while poorer districts with less capacity to generate revenue receive more from the state.

Local districts also have the authority to:

  • Generate an additional 15 percent of the adjusted SEEK base, otherwise known as Tier I funding, which the state partially equalizes. The tax rate that generates Tier I funding, referred to as the “HB 940” rate, is established considering revenues from other permissible taxes levied by the school district. No portion is subject to voter recall. Absent these KERA provisions, school districts would be subject to voter recall on the portion of any levied rate that generates more than 4 percent real property revenue growth over the prior year.15
  • Generate up to 145 percent of the adjusted SEEK base, subject to a voter referendum. Amounts generated through this levy are referred to as “Tier II” revenues, and are not equalized by the state. Tier II was established to set an upper limit on local effort, although there are some districts – due to grandfathering and anomalies that occur because of the interaction with other tax provisions – that currently levy a rate exceeding the Tier II upper limit.16

In theory, the shared responsibility between the state and local school districts should provide an adequate baseline of funding for all school districts, while allowing local communities, within limits, to exceed the baseline. In reality, the lack of meaningful state revenue-supported increases in the SEEK guaranteed base and Tier I equalization over the past several years has resulted in local school districts making up for lagging state resources through additional local levies. The state has, for example, shifted from fully funding the costs of transportation in school districts calculated by a formula to funding only slightly more than half of those costs. The increased reliance on local resources for school costs has resulted in a growing funding gap between wealthy and poor districts due to their differing abilities to generate revenue.17

Less State Revenue, More Local Effort

Amendments to the tax code the General Assembly passed under KERA in 1990 increased state revenue, but revenue has eroded since then.18 New and growing tax breaks have left fewer dollars for all public investments including education.19 Since the Great Recession, multiple rounds of state budget cuts have reduced education funding through direct cuts and freezes, which also amount to cuts once inflation and other cost increases are taken into account.20 Including SEEK and non-SEEK funds (which includes revenue for preschool, Family Resource and Youth Centers (FRYSCs), after school programs, textbooks and teacher professional development), audited per-pupil state revenue dropped an inflation-adjusted 14 percent between 2008 and 2016.21

Illustrating the shift in reliance from the state to local governments, total audited per-pupil local revenue increased by 5 percent over the same span of time. This shift has been occurring for decades, as illustrated by the graph below which shows that the share of state and local funding coming from the state has declined, while the share from local districts has increased.22

As noted previously, the problem with an increased reliance on local resources – and why such reliance leads to greater disparities in per-pupil funding – is that wealthier school districts have a larger tax base than poorer districts from which to raise additional revenue. In a 2013 analysis of local ability, KCEP estimated that with the same 4 percent increase the richest Kentucky school district could generate over 10 times more revenue per student than the poorest district.23 This 4 percent analysis is particularly relevant because it corresponds with the maximum tax rate a district can typically levy without the voter recall option.24 KDE data show the number of local districts levying the 4 percent rate has increased since KERA and spiked around the recession when state revenue was especially low.25

KDE data also indicate that despite their limited tax bases, poorer districts are demonstrating substantial effort to generate local resources with what they have. In 2016, the median per-pupil property assessment among all 173 school districts was $371,282. For the 82 districts levying the 4 percent rate – with per-pupil assessments ranging from $142,853 to $942,014 – the median property assessment was $373,172. That means a similar number of districts both below and above median property wealth chose to levy the 4 percent rate.

One particular challenge some poor school districts currently face is related to the waning coal industry: as coal companies close or reduce operations in impacted school districts, their tax payments on real and tangible property decrease. In turn, unmined mineral tax revenues decrease as far less coal extraction has led to reductions in the value of coal land that will no longer be mined. Based on analysis of KDE data, in the 2016-2017 school year the re-assessment alone reduced total local funding in the poorest quintile of school districts by $1.2 million and in the second quintile by $2 million. School districts in the top two quintiles were not impacted by the change in unmined mineral assessments.

The map below shows the distribution of quintiles across the commonwealth:

Hard-Earned Gains in Achievement at Risk

Kentucky’s schools have made major strides since KERA. The University of Kentucky’s Center for Business and Economic Research (CBER) found in 2011 that Kentucky had moved up on the Index of Educational Progress between 1990 and 2009 from 48th to 33rd place – more progress than most states  (over that time, our neighbor state Tennessee went from 44th to 42nd place).26 CBER also recently found that, once obstacles to cost-effective education spending like poverty, poor health and limited English proficiency are accounted for, Kentucky is one of just 11 states where the return on investment for education spending is higher than would be expected.27 In other words, these dollars are well spent.

Even with Kentucky’s efficiencies, research has found a causal relationship between funding levels and student outcomes. A forthcoming peer-reviewed study in the Quarterly Journal of Economics finds that school finance reforms like KERA improve educational attainment for students from low-income families as well as economic outcomes later in life like wages, family income and poverty incidence.28 Another working paper from the National Bureau of Economic Research finds improved equity also helps close achievement gaps between low-income school districts and economically better-off communities.29

The per-pupil state and local funding gap between Kentucky’s wealthiest and poorest school districts is widening and approaching the level it was before KERA. Without significant new state revenue that will grow reliably over time to improve per-pupil funding, we will lose gains made under KERA and experience the consequences of entire communities of students being left behind.

  1. Rose v. Council for Better Education, 790 S. W.2d 186 (Ky. 1989),
  2. Kentucky Legislature, “Acts of the 2006 Regular Session,” Chapter 170,
  3. Marcia Ford Seiler, Pam Young, Sabrina Olds et al, “2011 School Finance Report,” Office of Education Accountability, June 12, 2012,
  4. In Figure 1, the analysis comparing funding in the first and fifth quintiles for years 1990 through 2010 is from the Office of Education Accountability (OEA). Marcia Seiler et al, “2011 School Finance Report.” KCEP’s analysis for 2011-2016 relies on OEA’s methodology. Wealth is based on districts’ per-pupil property assessments and quintiles are enrollment-based. Changes have been made to the underlying data since OEA’s 2012 analysis: in 2014, state on-behalf funds and local activity funds were incorporated into the Kentucky Department of Education’s Audited Financial Reports. On-behalf funds are not included in OEA’s or KCEP’s analysis illustrated by Figure 1, but are discussed subsequently (for KCEP’s analysis of years 2014-2016, we subtracted on-behalf funds from total state revenue). However, isolating activity funds from other local revenue is outside the scope of this report, meaning that these funds are included in KCEP’s analysis in years 2014-2016, slightly increasing the equity gap for these years relative to 1990-2013. A couple of factors mitigate the impact this difference makes in comparing the data across all years from 1990 to 2016. First, the impact of activity funds on the equity gap is small: data from the 2012 OEA analysis show that activity funds increased the equity gap by an average of $25 a year (in 1990 dollars) between 2006 and 2010. Second, activity fund reporting is increasing but not yet robust, meaning data for 2014 through 2016 do not reflect the full extent of these resources as a share of revenue in local districts. Activity funds are contributions to schools from individuals and organizations such as Parent Teacher Association (PTA) donations, athletic and other event ticket sales and revenues from fundraising activities.
  5. The report also adjusts the quintile analysis by using a “comparable wage index” to account for district differences in cost of living, and by factoring in federal revenue and local “activity funds.” In 2016, the total local, state and federal funding gap between the first and fifth quintiles was $2,285 (in 2016 dollars, including local activity funds and state on-behalf funds). A full analysis of the equity gap that incorporates federal funding is not included, as we focus on challenges state decision makers have the ability to redress.
  6.  Marcia Ford Seiler et al, “2011 School Finance Report.”
  7.  Kentucky Department of Education, “Revenues and Expenditures 2015-2016,”,%20Revenues%20and%20Expenditures,%20Chart%20of%20Accounts,%20Indirect%20Cost%20Rates%20and%20Key%20Financial%20Indicators.aspx.
  8.  The aforementioned inclusion of activity funds in the underlying KDE data for 2016 increases the equity gap, although the increase is small. As a point of reference, the size of that increase in 2010 was $36 in 2016 dollars.
  9.  Accounting for variations in the cost of living across districts – which are likely reflected in retirement contributions – would refine this analysis of on-behalf funds, but is outside the scope of this report.
  10.  The Prichard Committee for Academic Excellence and the Kentucky Chamber, “A Citizen’s Guide to Kentucky Education: Reform, Progress, Continuing Challenges,” June 2016,
  11.  Joseph Stroud, “Governor Signs Historic Education Bill Law Ushers In School Reform, Higher Taxes,” Lexington Herald-Leader, April 12, 1990.
  12.  Kentucky Legislature, “Acts of the General Assembly; Kentucky Educational Reform Act Revenue Measures,” 1990, Western Kentucky University Library,
  13.  Districts are also required to levy 5 cents per $100 of assessed property to participate in the state program that supports facility funding.
  14.  The “adjusted SEEK base” also includes add-ons for transportation, at risk and other student populations with additional needs.
  15.  The tax provisions of KERA operate in conjunction with existing broad-based laws establishing requirements and limitations on the levy of property taxes, commonly referred to as the “HB 44” limitations. HB 44 generally provides that any rate levied by a local taxing jurisdiction that generates revenues from real property that are more than 4 percent above what was generated the prior year is subject to recall by the voters of the district. The interrelationship of the two sets of requirements adds a level of complexity to the local district rate setting process. Martha Seiler, Pam Young, Albert Alexander and Jo Ann Ewalt, “Understanding How Tax Provisions Interact With the SEEK Formula,” Legislative Research Commission, November 15, 2007,
  16.  Marcia Ford Seiler et al, “Understanding How Tax Provisions Interact With the SEEK Formula.”
  17.  Jason Bailey, “Vast Inequality in Wealth Means Poor School Districts Are Less Able to Rely on Local Property Taxes,” Kentucky Center for Economic Policy, December 11, 2013,
  18.  Since 1991, Kentucky’s General Fund has shrunk from 7.33 percent of state personal income to 5.85 percent, which amounts to more than $2.5 billion in less revenue. KCEP analysis of data from the Office of the State Budget Director and Bureau of Economic Analysis.
  19.  Ashley Spalding, et al., “Investing in Kentucky’s Future: A Preview of the 2016-2018 Kentucky State Budget,” Kentucky Center for Economic Policy, January 4, 2016,
  20. Many states are finally investing more in education through their core funding formula since the recession, but Kentucky ranks as the 3rd worst among the states still cutting for its per-pupil decline. Michael Leachman, Kathleen Masterson and Eric Figueroa, “A Punishing Decade for School Funding,” Center on Budget and Policy Priorities, November 29, 2017,
  21.  KCEP analysis of data from Kentucky Department of Education, “Annual Financial Revenues and Expenditures,”,%20Revenues%20and%20Expenditures,%20Chart%20of%20Accounts,%20Indirect%20Cost%20Rates%20and%20Key%20Financial%20Indicators.aspx. This estimate excludes on-behalf revenue due to the lack of statewide data prior to 2014.
  22.  As explained previously, this analysis (Figure 2) excludes on-behalf funds and includes activity funds in 2014-2016. Including on-behalf funds would increase the share of total state and local funding from the state. Excluding activity funds would slightly reduce the share of total revenue coming from local governments.
  23.  Jason Bailey, “Vast Inequality in Wealth Means Poor School Districts Are Less Able to Rely on Local Property Taxes.”
  24.   In the years after KERA, the HB 940 rate was often higher than the 4 percent rate. But with more districts having achieved Tier I funding, today the 4 percent rate is typically higher. Until legislative action in 2003, school districts were not allowed to adopt the 4 percent rate if it surpassed the Subsection 1 rate associated with HB 44 – the rate that “produces no more revenue than the previous year’s maximum rate.” Especially since then, the 4 percent rate has given districts the most ability to raise revenue. Very few have exceeded the 4 percent limit under HB 44 which makes the decision subject to voter recall. Marcia Seiler et al, “Understanding How Tax Provisions Interact With the SEEK Formula.” See also Kentucky Department of Education, “Local District Tax Levies” and “Historical Tax Rates by Levied Type,”
  25.  Kentucky Department of Education, “Local District Tax Levies” and “Historical Tax Rates by Levied Type,” Marcia Seiler et al, “Understanding How Tax Provisions Interact With the SEEK Formula.”
  26.  The index looks at degree attainment rates, ACT scores, high school drop out rates, AP test scores and other national test scores. Michael Childress and Matthew Howell, “Kentucky Ranks 33rd on Education Index,” University of Kentucky Center for Business and Economic Research, July 2011,
  27.  Christopher Bollinger, William Hoyt, David Blackwell and Michael Childress, “Kentucky Annual Economic Report 2017,” University of Kentucky Center for Business and Economic Research, 2017,
  28.  Kirabo Jackson, Rucker Johnson and Claudia Persico, “The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms,” The Quarterly Journal of Economics, forthcoming,
  29.  Julien Lafortune, Jesse Rothstein, Diane Whitmore Schanzenbach, “School Finance Reform and the Distribution of Student Achievement,” NBER Working Paper, February 2016,

Tuition Increase Ceilings Announced

Today the Council on Postsecondary Education (CPE) announced the maximum in-state undergraduate tuition and mandatory fee increases the state’s public universities and community colleges will be allowed to charge students in the coming year. These tuition caps range from zero at the University of Louisville (at their request) to five percent at four of the state’s comprehensive institutions. In the coming months, the higher education institutions will decide how much to increase tuition and fees within these limits. While college affordability is widely understood to be a serious challenge in Kentucky, years of state budget cuts to higher education have resulted in continued tuition increases.

Tuition Setting Process

CPE is responsible for setting ceilings for how much tuition can increase at the state’s public universities and community colleges. Here are the caps approved at today’s CPE meeting:

  • University of Louisville – 0 percent (CPE would have authorized a 4 percent cap, but UL opted for no increase)
  • Western Kentucky University – 3 percent
  • Kentucky Community and Technical College System – 3.9 percent
  • Northern Kentucky University and University of Kentucky – 4 percent
  • Eastern Kentucky, Kentucky State, Morehead and Murray State universities – 5 percent

The dollar amounts for these tuition ceilings can be found here.

In order to determine the appropriate tuition ceilings, CPE’s Tuition Development Work Group considered a number of factors — including out-of-pocket costs in each sector for students who receive grants or scholarships, expected upcoming increases in mandatory contributions to the state pension system (that apply to all but UL and UK, which do not participate in the Kentucky Employees Retirement System) other fixed cost increases and what the market may be able to bear in terms of tuition increases. The work group also took into consideration that NKU and WKU are slated to receive additional appropriations in 2018 to address disparities in the allocation of state funds among the comprehensive institutions. The work group’s recommendations were adopted at today’s CPE meeting.

Last year’s tuition and fee ceilings were 5 percent for UL and UK, a “common dollar increase” ceiling of $432 for the comprehensive universities (between a 4.65 percent and a 5.87 percent increase, depending on the institution) and a $9 per credit hour ceiling for KCTCS (about a 6.1 percent increase).

Now that these caps have been set, the postsecondary institutions will decide exactly how much they plan to increase tuition within these limits; these decisions typically end up pretty close to the ceilings.

Why Tuition Keeps Going Up

The tuition increases currently under consideration are largely the result of state budget cuts to higher education over the years. As seen in the graph below, the state share of total public funds in the state’s public postsecondary institutions decreased from 71 percent in 2002 to just 44 percent in 2016. According to the Center on Budget and Policy Priorities, Kentucky ranks sixth worst in the nation in (inflation-adjusted) per-student funding cuts since 2008. In total, the state’s public universities and community colleges have had their budget cut by 30 percent, in inflation-adjusted terms since 2008; that’s a $374 million difference.

Source: Kentucky Council on Postsecondary Education. State share is the net General Fund appropriation divided by total public funds. Student share is the net tuition and fee revenue divided by total public funds.

In order to make up for some of the losses in state funding for higher education, tuition and fees have increased between 42.6 percent (KCTCS) and 64.0 percent (UL) since 2008. Meanwhile, even after raising tuition the state’s public postsecondary institutions are unable to cover all of their costs. This is in part due to the growth in fixed costs at the institutions, like health insurance and utilities, on top of state General Fund cuts. As seen in the graph below from CPE, the cumulative increase in revenue collected from tuition and fees does not cover the cumulative growth in costs plus the cuts in General Fund dollars to the institutions.

Even with tuition increases, the universities and community colleges reported in September 2016 they had cut a total of 980 positions and 56 programs in response to recent state budget cuts.

Despite the thoughtfulness of the Tuition Development Work Group and the tough spot the state’s public universities and community colleges are in, these tuition increases will make college out of reach for even more Kentuckians. Low-income and minority students are already less likely to enroll and graduate, face more financial difficulties even when they attend community college and receive Pell grants and more frequently take out additional loans to pay for college. The state’s new Work Ready scholarship will help a relatively small number of community college students, by covering tuition and fees for those earning degrees in certain fields, but our state needs greater investment in all aspects of higher education in order to reach its goals — including funding for public universities and community colleges as well as state need-based financial aid.

Performance Funding in Kentucky Should Promote Successful Outcomes for All Students

To view this brief in PDF form, click here.

A work group has been tasked with developing a model of performance-based funding for Kentucky’s public postsecondary institutions in the coming months, with five percent of higher education funding to be contingent upon performance in 2018. As Kentucky grapples with the best way to implement performance-based funding, a guiding principle should be the need to bring about successful outcomes for all students.

This principle is important in order to ensure that nontraditional students such as low-income, low-skilled adults do not get left behind as state universities and community colleges begin to receive funding based on graduation rates and the number of degrees that are produced, among other metrics. As noted recently in a statement by the Lumina Foundation’s president and CEO: “A focus on equity in student outcomes is an essential objective of today’s outcomes-based funding models. In addition to increasing attainment, we must close the current achievement gaps for students of color and low-income students.” 1

The performance funding model that ends up being implemented in Kentucky needs to include in its measures of success how well the state’s public postsecondary institutions are doing at helping low-income students, including adults, successfully move through developmental education courses, persist in earning college credits and acquire degrees and other credentials. This model should not include measures that discourage institutions from serving underprepared low-income students or dissuade this population from attending.

Why Success Among Low-Income Adults Is an Important Measure

In 2013, 65.6 percent of Kentuckians in their primary earning years (25-54) did not have an associate’s degree or higher. 2 These adults typically have lower wages than those with more education, which makes it difficult to meet basic family expenses, help move their children out of poverty and into higher education in the future, contribute to the state economy and save for retirement.

While postsecondary degree attainment in Kentucky has been growing, little to no progress has been made on addressing the gaps between degree attainment for low-income and other college students. The bachelor’s degree graduation rate for all Kentucky students at four-year institutions in 2015 was 49.4 percent, up from 47 percent in 2009. Meanwhile, the bachelor’s graduation rate for low-income students was 36.3 percent — down from 46.2 percent in 2009. 3

Among the barriers faced by low-income students who are often adults are: financial difficulties, the need to work and support a family, being academically underprepared and losing momentum in developmental education courses rather than moving on to credit bearing courses, and the need for supports like intensive advising and counseling particularly for first generation college students. 4 At its best, performance funding could help the state’s higher education institutions address these gaps in degree attainment.

Strategies for Promoting Successful Outcomes for All Students

As outlined in a Working Poor Families Project report, among the strategies for ensuring that performance-based funding promotes success for all students are: 5

Measure performance broadly — for instance, by including all types of students and educational programs. This includes part-time as well as full-time students and certificate as well as diploma programs.

Adopt performance criteria that reward intermediate educational outcomes, as well as longer term ones. This includes acknowledging educational checkpoints related to student success in addition to credential attainment. Such intermediate educational outcomes could include: completion of a first course in developmental education; transition from developmental education to a first credit bearing course; attainment of the first 15 and 30 credit hours of college level instruction; and receipt of a degree, diploma or certificate.

Include incentives for serving disadvantaged Kentuckians like low-income working adults. This is important as these students typically face multiple barriers to success in college.

 The Performance Model Supported by Kentucky’s Higher Education Institutions Followed These Strategies

Among the performance-based funding models under consideration leading up to the formation of the work group were one put forward by the state’s Council on Postsecondary education (CPE) with the support of the state’s public university and community college presidents toward the end of last year and a model included in the Senate’s budget proposal during the 2016 General Assembly.

The model developed by CPE could have promoted successful outcomes for all students, including low-income and adult students, through some of the strategies described above. At the same time, while the metrics in this model are promising additional details would be needed to fully assess the extent to which it would lead to successful outcomes.

Here are the performance metrics in the CPE proposal: 6

  • Degrees and credentials produced (certificates, diplomas and associate degrees at the state’s community colleges and baccalaureate degrees at the public universities)
  • Retention rates from first to second year
  • Progression metrics
    • Percentage of students earning 30+ credit hours per academic year at the University of Kentucky
    • Students progressing beyond 60 credit hour and 90 credit hour thresholds at all other four-year institutions
  • College readiness
    • Underprepared students completing credit bearing math course at a community college
    • Underprepared students completing credit bearing English course at community college
  • Graduation rates (three-year rates at community colleges and six-year rates at four-year institutions)
  • Closing achievement gaps for underrepresented minority students and low-income students
  • Sector specific metrics
    • Research and Development expenditures at the research universities
    • STEM (Science Technology Engineering and Mathematics) degree production at the comprehensive universities
    • Workforce education and training contact hours and transfers out with an associate degree at the community colleges
  • As yet to be determined institution specific metrics

This performance funding model measures performance broadly — for instance, by including certificates and diplomas as well as associate degrees for community colleges and not disincentivizing institutions other than the University of Kentucky (UK) from having part-time students. At UK, a performance metric is the share of students earning more than 30 credit hours a year, incentivizing the university to encourage full-time attendance and discourage students from enrolling part-time, which is necessary for many adult students. However, it is important that the other institutions, particularly the state’s community colleges, would be able to continue serving low-income, low-skilled adults with these performance metrics.

The model also includes rewards for intermediate educational outcomes, in addition to longer term ones, including: retention rates from first to second year, progression metrics for four-year institutions and completion of credit-bearing courses in math and English by underprepared students at community colleges, which is a measure of students successfully moving beyond developmental education courses.

In addition, the model incentivizes closing achievement gaps for underrepresented minority students and low-income students. It is also important to note that institutions will be evaluated based on institution specific metrics, rather than all being held to the same standard, which acknowledges the schools’ different missions and student bodies.

The Senate model’s performance metrics were largely based on CPE’s; however, there are important differences that could negatively impact underprepared students. 7 Among the Senate’s main metrics were degrees and credentials awarded; student retention rates from first to second year; percentage of full-time undergraduates earning 30 or more credit hours a year; and graduation rates and sector-specific metrics. In contrast to CPE’s model though, the Senate proposal did not measure and reward the successful progression of underprepared students or provide a separate metric for closing achievement gaps. While the Senate model’s scoring system did boost an institution’s scores for the degree/credential attainment and retention rate metrics for low-income and underrepresented minority students, it is not clear how much weight these measures would be given in the calculations. These gaps in performance metrics could disincentivize institutions from serving underprepared students who are often low-income. Academically underprepared students often have more difficulty staying enrolled in college and graduating, particularly within the prescribed time frame.

It should also be noted that CPE’s proposal was based on new money to offset budget cuts to the state’s higher education institutions in recent years, and the Senate’s proposal would have made 25 percent of 2018 funding contingent upon performance (other than Kentucky State University (KSU), which was exempt). In the end, the final budget proposal had five percent of institutional funding (with KSU exempted) contingent upon performance, and cut higher education funding an additional 4.5 percent.

It is problematic that performance-based funding will be implemented in the context of budget cuts, which makes meeting performance goals difficult. Increased tuition as a result of state budget cuts jeopardizes the ability of low-income students to afford to attend or persist in college. In addition, low-income, particularly adult students often require supports like intensive academic advising and education/career counseling to overcome numerous barriers to college persistence and degree attainment, and institutions may have difficulty affording these supports given yet another round of budget cuts is going into effect. 8

While there is more than one way to design performance-based funding to be effective at promoting successful outcomes for all Kentucky students, the three general strategies mentioned previously should be followed. In addition, the data system supporting the model will need to track outcomes for adults, Pell grant recipients and part-time students, and metrics should be reviewed on a regular basis and modified as needed. As an example, Tennessee does a five-year review of their funding formula and recently increased the premium that institutions receive for enrolling adult, low-income and academically underprepared students to further encourage enrollment of these “at-risk” students and recognize the additional supports necessary to ensure their success. 9


  1.  Lumina Foundation, “Outcomes Based Funding: Important Takeaways for State Policymakers,” March 10, 2016,
  2.  Working Poor Families Project, Population Reference Bureau, analysis of 2013 American Community Survey.
  3.  Kentucky Council on Postsecondary Education, “Statewide Performance Metrics,” Stronger by Degrees,
  4.  Ashley Spalding, “Crossing the Finish Line,” Kentucky Center for Economic Policy, November 26, 2012,
  5.  John Quinterno, “Making Performance Funding Work for All,” Working Poor Families Project, Spring 2012,
  6.  Kentucky Council on Postsecondary Education, “2016-2018 Postsecondary Education Budget Recommendation Institutional Operating Funds,” November 13, 2015,
  7.  Ashley Spalding, “Questions and Concerns About the Senate’s Performance-Based Funding Proposal,” Kentucky Center for Economic Policy, March 25, 2016,
  8. Ashley Spalding, “Five Reasons Cutting Higher Education Hurts Low-Income and Minority Kentuckians,” Kentucky Center for Economic Policy, May 24, 2016,
  9.  Nate Johnson and Takeshi Yanagiura, “Early Results of Outcomes-Based Funding in Tennessee,” March 10, 2016,

Five Reasons Cutting Higher Education Hurts Low-Income and Minority Kentuckians

Higher education funding issues in Kentucky have been in the news a lot recently — for ranking among the worst in the country for per-student cuts in a new report; with the public universities and community colleges beginning to implement layoffs, unpaid furloughs and hiring freezes; and as the process of raising tuition for the 2016-2017 school year is nearly finalized. While many of these conversations focus on the impact of cuts on the institutions themselves, we should not lose sight of how these budget cuts hurt all Kentuckians seeking higher education — especially low-income and minority Kentuckians. Budget cuts can mean that these students are:

Less likely to enroll and graduate.

Research shows that students with low-incomes and students of color are less likely to enroll when tuition goes up; due in large part to a lack of resources they are more likely to be dissuaded from attending because of increased cost. Kentucky is already falling short in degree attainment for these students. There are significant gaps in the graduation rates of low-income and underrepresented minority students compared to other students, and little to no progress has been made in recent years. Continued higher education funding cuts will likely worsen the problem.

According to data from the Council on Postsecondary Education the bachelor’s graduation rate for the state was 49.4 percent in 2015, up from 47 percent in 2009. Meanwhile, the bachelor’s graduation rate for low-income students was 36.3 percent — down from 46.2 percent in 2009, and for underrepresented minority students it was 34.8 percent, up just a little from 2009’s 33.2 percent.

degree graph

Source: Council on Postsecondary Education Dashboard. Data for low-income student graduation rates in 2010 were not available.

Facing more financial difficulties even when they attend community college and receive Pell grants.

Low-income students receiving Pell may be able to use the federal scholarship to cover tuition and fees at a Kentucky community college, but these grants are not large enough to cover the full costs of college (housing, books and supplies, transportation, etc.) — especially for the many adult students at community colleges who often have families to support rather than parents supporting them. In addition, not all students receive the maximum Pell amount.

college costs

Source: Elizabethtown Community and Technical College and U.S. Department of Education. Amounts in graph are for enrolling in 12 credit hours for 2 semesters.

More likely to take out additional loans to pay for college.

In 2012, 79 percent of students from families whose incomes are in the lowest 25 percent graduating with a bachelor’s degree had student loans and more than  4 out of every 5 African American students borrowed at public institutions. Students who receive Pell are actually more than twice as likely to borrow and have higher amounts of student loan debt.

In Kentucky we’ve seen the average student loan amount increase 63 percent between 2008 and 2014, with many unable to repay these loans; our state ranks third highest in the rate of student loan default.

Continuing to face affordability problems even with the increase in funding for state need-based aid.

It was an important step in the right direction for the state to fund an additional 8,000 need-based scholarships in the 2016-2018 budget. However, the unmet need is still much greater than this, with more than 62,000 qualified students being denied need-based scholarships due to a lack of funds in 2015 alone. In addition, scholarship amounts are small ($1,900 a year for a full-time student receiving a College Access Program grant) and the purchasing power of these scholarships continues to decline as tuition increases and scholarship amounts do not.

Likely to see reduction in support services available.

Public university and community college presidents gave testimony during the legislative session that budget cuts could lead to the reduction of support services for students who have difficulty navigating aspects of the higher education pipeline and earning a degree; these students are often low-income, minority and first generation college students. Students who are academically underprepared or are the first in their families to attend college often face barriers to completing college. Among the services that can increase the likelihood of successfully earning a degree are intensive academic advising and education/career counseling.

Facing Challenges with the New GED Test in Kentucky

Facing Challenges with the New GED Test in Kentucky1

Over the years, the state’s adult education programs have made great strides in reducing the share of Kentuckians who do not have a high school diploma or GED® (General Educational Development) credential. However, Kentucky – alongside many other states – is experiencing a difficult adjustment to the new 2014 GED test. The high school equivalency credential exam was updated to better align it with the college and career ready standards for today’s high school graduates. These changes in the test pose challenges as the GED test is now more rigorous, more expensive and can only be taken on a computer. The state has temporarily mitigated the exam’s cost, and adult education providers have worked to prepare students to pass the new test. However, the number of GED graduates has declined dramatically. Moving forward, the state should invest in additional strategies to increase Kentucky’s GED credential attainment.

Importance of GED Diploma Attainment

The GED diploma is an important step toward employment as well as postsecondary education for many who did not graduate from high school and is important to Kentucky’s economic future. In 2013, 360,830 working age (18 to 64) Kentuckians – 13.1 percent – did not have a high school diploma or equivalency credential, ranking Kentucky 37th in the nation on that measure. 2 In addition, 31,550 Kentucky low-income working families – or 21.4 percent of the state’s low-income working families — had at least one parent without a high school degree. 3

Increased educational attainment is associated with higher wages, among other benefits. There is a 33 percent difference between the 2013 median annual earnings for a person in Kentucky with less than a high school diploma and one with a high school diploma ($22,544 compared to $33,852). 4

In addition to helping individuals and families, increases in education and associated bumps in income are beneficial to the state’s economy. Better educated Kentuckians are more productive, earn more and contribute more in taxes over their lifetimes.

A GED diploma also increasingly serves as a stepping stone to the postsecondary education required by most jobs these days. By 2020, 62 percent of all Kentucky jobs will require some higher education. 5 Currently just 34.4 percent of adults 25 to 54 in Kentucky have an associate’s degree or higher, ranking the state 9th from the bottom on this measure. 6

Kentucky has made important progress in adult education. The percentage of working age Kentuckians without a high school or GED diploma decreased from 29 percent in 1990 to 21 percent in 2000 and then to 15 percent in 2010. 7 Recently released data for 2014 shows that the state is now down to 13 percent without this credential. 8

However, since the new GED test was implemented Kentucky’s GED graduation numbers have plummeted – dropping from 7,083 GED graduates in 2013-2014 to 1,663 in 2014-2015. Fortunately there has been some increase in GED diploma attainment in recent months. 9

The New Test

Since its development in 1942, the GED test has been updated four times. The fifth edition of the test, the 2014 GED, went into effect Jan. 2, 2014. This test includes more significant changes than in the past, reflecting a decade of considerable shifts in educational standards and technology.

The test has been modified to reflect college and career ready standards that now guide high school education in most states. The minimum score needed to pass each section of the 2014 GED is based on the performance of a national sample of 2013 high school seniors. 10 As part of this realignment, the exam includes short answer questions (which were not a part of the 2002 version of the test) and extended responses that require more analysis and depth of understanding to answer. Some of the significant differences in test structure and content are described in Figure 1 below.

Figure 1

Selected Differences Between the 2002 and 2014 GED Test

GED Figure 1

Source: 2002/2014 GED Test Comparison, Kentucky Educational Television (KET) for 2002 GED information; GED Testing Service for up-to-date 2014 GED information. 11

In addition to new skills and somewhat different subject matter, the new version of the GED requires some computer competency. While the necessary computer skills to pass the 2014 GED are basic, they may be challenging for some in need of a GED credential. For instance, in order to successfully complete the exam a test-taker needs to type approximately 20 words per minute. 12

The 2014 GED test – which resulted from a partnership between the non-profit American Council on Education (ACE), which was historically responsible for the test, and the for-profit company Pearson VUE – is also more expensive than the 2002 version. The new test costs $120 ($30 per section) in Kentucky, compared to $60 for the previous one – although, as described below, so far test-takers have only had to pay a third of the cost.

Impact in Kentucky

There is typically a dip in participation after a new version of the GED test is implemented. But the decline has been more substantial with the 2014 GED test. 13 There was a 33 percent decline in GED test-taking nationally with the 2002 GED test launch, while preliminary national numbers for 2014 showed a larger drop of 48 percent for high school equivalency test-taking. 14

As seen in the graph below, GED diploma attainment rates in Kentucky have been steadily declining in recent years, but the decrease between 2013-2014 and 2014-2015 was a dramatic 76.5 percent.

Figure 2

GED Figure 2

Source: Kentucky Adult Education, “Briefing on Kentucky’s Adult Education System,” Aug. 10, 2015.

Meanwhile, Kentucky’s GED pass rates are high – more than 80 percent of test-takers pass the 2014 GED. 15 But this is largely because in Kentucky, and some other states, a state regulation requires that in order to take the GED a person must first pass the GED Ready™ test, the official GED practice test. 16 Kentucky does not publish data on the number of students who take the GED Ready test.

Barriers to GED Diploma Attainment

On a national level, possible barriers to GED diploma attainment with the new test that have been raised are: the cost of the test, the new content and skills needed to pass, and intimidation by the increased rigor of the test. 17 These are all challenges a state needs to address in order to better help those without a high school diploma take and pass the high school equivalency exam.


So far the increased cost of the test has not been a barrier in Kentucky. Kentucky Adult Education (KYAE) has been able to provide test-takers with vouchers that cover two-thirds of the cost of the test (each voucher covers $20 out of the $30 cost per section) – making the new GED test even more affordable than the previous version ($40 out of pocket, versus $60). The vouchers were purchased through federal Workforce Investment Act (WIA) funds and have been made available on a first-come, first-served basis, with everyone taking the GED automatically receiving one. There were originally 8,500 vouchers in total, but there are very few remaining. In the near future, KYAE will likely provide vouchers for half of the cost of the test. 18

Financial assistance is also available directly from some of the state’s adult education programs that have raised funds in the community to help provide scholarships to students with financial need, but these opportunities vary by adult education provider. Additional funds to defray the cost of taking the GED are sometimes available in local communities (e.g., from community based organizations, banks, etc).

The requirement to complete the GED Ready Test prior to the GED has a financial benefit to test-takers. The state currently covers the cost of the GED Ready test ($11), and more than 80 percent of students who go on to take the GED test pass. This means that most students who pay to take the exam do earn the credential.

Increased Rigor and Computer Skills

Adult education instructors receive professional development to help with teaching the content and skills students need to pass the 2014 GED test. KYAE currently provides considerable professional development offerings that are aligned with College and Career Ready Standards (CCRS); many are specifically targeted to the 2014 GED – covering both test content and technology and other skills needed. 19 Adult education instructors are also required to use technology and digital learning in their classrooms, and some professional development courses focus on this.

In addition to the importance of instructors receiving professional development, teachers who have expertise specific to the content of the new GED test may be more effective. Currently the minimum qualifications for an adult education instructor are: a bachelor’s degree in education or a content-related field, with minimum test score requirements – including a 21 composite score on the ACT or 990 on the SAT; a current teaching certificate in the content area of instruction is preferred. 20 Adult education programs are responsible for hiring their own instructors, and KYAE has not analyzed how many or what share of instructors meet this preferred criteria.

According to KYAE – largely based on reports from adult education providers – computer skills have not been a barrier to Kentucky adult education students earning a GED diploma as the requirements are basic and are incorporated into adult education classes. However, it is difficult to know if the shift to the computer based test has prevented some Kentuckians from pursing a GED credential since the test change. New Hampshire offers an alternative high school equivalency exam with both computer and paper based formats, and 85 percent choose to take the paper based test. 21

KYAE has implemented an initiative called “GED Express” to help students accelerate their preparation for and passing of the GED test. 22 As part of that effort adult education programs are being encouraged to have individuals take the GED Ready test soon after beginning their preparation for the GED. This gives instructors and students a good idea of the specific areas that need to be addressed and how to target instruction and learning and move students more quickly to taking (and passing) the GED. In addition, KYAE is working with the directors of adult education programs to use more data to guide their approach – for instance, by paying attention to which students have passed the GED Ready test as these students should be moving on to take the GED exam.

KYAE is also optimistic about a new partnership between GED Testing Service and Wal-Mart, KFC, Taco Bell and Southeastern Grocers – called “GEDWorks” – to provide a free program to help interested employees earn a GED diploma. 23

In addition to the test actually requiring new and more rigorous content and skills, the perception that the test is harder can also be a significant barrier. KYAE has done marketing to try to combat this perception, but it reportedly remains a big challenge. Radio ads specifically for the new GED test have included quotes from those who successfully passed the test. These are in addition to continued marketing efforts to recruit adult education students that include flyers, postcards and statewide advertising through the Kentucky Broadcasters Association. Unfortunately due to a tight KYAE budget – having faced round after round of budget cuts since the recession – marketing funds are very limited. The target population can also be difficult to recruit given the complexities of daily life for many low-income persons without a high school diploma. A national survey of GED test administrators has raised the concern that adult education instructors may be among the most vocal about the difficulty of the new GED test, which could have a discouraging impact on students; a recommendation proposed in response to this is that teachers participate in additional professional development to increase their confidence. 24

How Other States Are Addressing Barriers

In response to the changes in the GED test, a number of states have opted to use alternative high school equivalency tests that are phasing in increased rigor, may be somewhat more affordable and offer a paper/pencil option. Several states have worked to mitigate the costs of the new GED in other ways as well.

Leading up to the 2014 GED, two new tests emerged – the HiSET (High School Equivalency Test), which is a product of the Educational Testing Service and the Iowa Testing Program, and the TASC (Test for Adult Secondary Credential), which was a product of CTB/McGraw-Hill (it has since been sold to Data Recognition Corporation). As seen in Figure 3, 10 states have dropped the GED entirely; these states are offering the HiSET, TASC or both. Other states are offering one or both of the new exams alongside the GED. Currently 40 states offer the GED test, 14 offer the HiSET and 9 offer TASC.

Figure 3

GED Figure 3

Source: Barry Shaffer, “The Changing Landscape of High School Equivalency in the U.S.,” May 2015,

Illinois and Colorado will soon offer the HiSET and TASC alongside the GED test, and other states are in the process of considering or preparing to implement changes to the high school equivalency options available.

Kentucky’s only high school equivalency option is the GED exam. While KYAE reports they are open to other possibilities, they maintain that at this point the downsides outweigh benefits: The cost difference between the alternative tests and the GED is not significant enough to warrant a switch; the portability of the other tests has not been adequately established (i.e., will employers in states that do not offer these tests recognize the credential); and the content of the alternative tests may not be as aligned with college and career ready standards as the 2014 GED – for instance, KYAE has noted that students preparing for these tests are told they can use the 2002 GED study materials. 25 They also point out that these exams are eventually moving to just a computer based format.

The cost of the HiSET and TASC are somewhat lower than the GED test. Before test center and state administration fees, both the HiSET and TASC cost about $50. Just $80 of the cost of the 2014 GED test in Kentucky is for the test itself; the remaining $40 is for its administration.

In addition, the pass rates for the HiSET and TASC in 2014 are actually a little lower than those for the 2014 GED. In 2014 the national GED test pass rate was 63 percent; for TASC it was 62 percent and for HiSET it was 59 percent. 26

The availability of a paper/pencil option has been a major factor for states offering an alternative test. Although research has shown that some test-takers perform better on the computer based GED test when the content is the same, the concern is that many low-income adult education students may not have high enough levels of digital literacy. 27 There may be other reasons for test-takers to prefer the paper/pencil format as well.

So far it isn’t clear whether or not states that dropped the GED test for one of the other tests, or offered multiple tests, are faring better than those that offer the GED test alone. Here is a preliminary look at several states that are utilizing alternative tests:

  • In 2014, Indiana replaced the GED test with the TASC. That year 5,508 took the test, and the pass rate was 77.7 percent. 28 This is compared to around 9,650 taking the GED in 2012 and 14,350 taking it in 2013 in a push to complete it before the test change; the 2013 pass rate was 79 percent. 29
  • New York switched to the TASC in 2014. The share of students taking the test who passed it was around 50 percent, which is close to the 53.8 pass rate for the GED test in New York in 2012 (2013 is considered an anomaly since a higher than average number of students tried to take the GED test the year before this version of the test was discontinued). However, more than 43,000 New Yorkers took the GED test in 2012 while only 22,598 took the full TASC in 2014. 30
  • California, which initially implemented the HiSET alongside the 2014 GED test (and has begun offering the TASC), has seen much lower GED test-taking as well as passing rates than in previous years; 44,000 to 57,000 students have taken the GED test each year in the last several years, with 68 to 78 percent passing – but in 2014 only 20,000 took the test, with 58 percent passing. And only 1,803 students took the HiSET, with 64 percent passing. With the GED test and HiSET combined, the state experienced a drop of more than 35,000 students taking a high school equivalency exam. 31

At least 12 states charge less than the standard fee for the GED as a result of state-provided subsidies (i.e., a GED test-taker pays $11.25 per GED modules – or $45 for the entire battery of tests). Several (i.e., Connecticut, New York and Maine) fully subsidize the test for state residents. It is notable that just 6.8 percent of people ages 18 to 64 in Maine do not have a high school degree or equivalency credential and just 9 percent in Connecticut – although it is 12.5 percent in New York. 32 These states also have higher shares of adults ages 25 to 54 who have an associate’s degree or higher. In Kentucky, 34.4 percent do (ranking Kentucky 42nd in the nation on this measure), while in Connecticut it is 48.1 percent (4th highest in the nation), in Maine it is 39.4 percent (29th highest in the nation) and in New York it is 47.4 percent (6th highest in the nation).

In addition, most states also offer high school credit recovery programming that leads to a high school diploma. 33 This allows local school districts to award high school diplomas to those who make up the credits they need for their uncompleted high school diploma. The Kentucky Department of Education does not have such a program.

At least 11 states have a competency based National External Diploma Program (NEDP), which has students demonstrate competencies through assignments completed at home or in the office. 34 Kentucky piloted NEDP at one point, but according to KYAE it was discontinued largely due to its expense. The cost of the NEDP varies but is typically more than the GED test.

Kentucky’s GED Pipeline

In addition to the challenges to GED attainment in Kentucky discussed so far, it is generally difficult to recruit those without a diploma for adult education. KYAE has had difficulty serving more than four or five percent of those without a high school diploma. 35 There were 15,188 Kentuckians enrolled in adult education in 2014-2015 who were at least 18 years old and did not already have a high school diploma. This is just about four percent of the total number of Kentucky adults without a high school credential. This is not a new phenomenon; in 1999 participation by this target population was around five percent. 36

With the new GED test, there has been some decline in adult education participation, but there is even more of a decline in the share of participants who seek – or are ready – to take the GED test. In 2015, 25 percent of Kentucky’s adult education students were academically below the 6th grade level, and 39 percent already had a high school diploma (it is understood that most were using the adult education courses to help with developmental education issues they were facing in college). 37

KYAE has suggested that the low GED diploma attainment rates need to be considered within the context of a decreasing number of Kentuckians in the “pipeline” to take the test. For instance, currently nearly half (47 percent) of working age adults without a high school credential are ages 45 to 64, which may not be an optimal time for going back to school or starting a new career. 38 At the same time, there is still a large number of Kentucky adults without a high school diploma who are not near retirement age. Around 191,000 Kentuckians without a high school diploma are 18 to 44; over 212,000 were ages 25 to 54 in 2013. 39

KYAE has emphasized other reasons: Many without a diploma in Kentucky are hard to reach, including they typically have more health problems (i.e., hearing, cognitive and/or vision difficulties) and are more likely to have a disability – 33.2 percent of Kentuckians 18 to 64 without a diploma – which may prevent them from working. 40

In terms of a somewhat depleted pipeline, KYAE has also noted that there was a surge of GED test-taking and credential attainment in the later part of 2013, when the state offered the GED test for free for a period leading up to the 2014 GED exam. 41 In the six months prior to the 2014 GED test, about 6,700 students earned a GED credential – compared to the same six month period the previous year, which was just 3,700.

There are also often more complex reasons Kentuckians without a high school diploma may not participate in adult education. KYAE (then the “Kentucky Department for Adult Education and Literacy”) commissioned a 1999 study of why Kentucky adults without a high school diploma did not participate in adult education programs and the reasons included the GED diploma not being considered an appropriate goal by many under-educated adults as well as adult education programs directly competing with everyday priorities of work, family and community responsibilities. 42

Unique Challenges Faced in Correctional Settings

Inmates in Kentucky’s prisons and jails have faced even greater barriers than those enrolled in adult education outside of correctional settings. Among the issues are the logistics of preparing students for the GED test and administering the exams with the new computer based format. These are in addition to difficulties inmates already faced in attaining a GED prior to 2014, including inmates being transferred or released before successfully completing the test.

Figure 4 details the drop in GED graduates in the state’s jails and prisons in fiscal years 2014 and 2015.

Figure 4

GED Figure 4

Source: Kentucky Department of Corrections.

As is evident in Figure 4, prior to the introduction of the new test, GED graduation rates were relatively consistent. The drop from 2013 to 2014 was steep – and even steeper between 2014 and 2015, although this drop is actually only a little greater than for the state as a whole – 83 percent, compared to 77 percent for the state. 43 Fortunately, GED diploma attainment in Kentucky’s prisons and jails is on the rise. 44

Many of the challenges have to do with the computer based aspect of the test. The GED Testing Service did offer states the option of applying for “Transitional Waivers” to enable correctional institutions to continue testing on paper for up to a year or more as they transitioned to the computer based test, but Kentucky did not apply for such a waiver. The reasoning was that it would be better to go ahead and move forward with the inevitable change in the test.

Prior to the 2014 GED test, exam administrators called GED Test Examiners came to the state’s prisons and jails. Now, with the computer based test, prisons and jails have three options: 1) become a Pearson VUE testing center; 2) transport inmates to a correctional facility that is a Pearson VUE testing center or contract with a public Pearson VUE/GED Testing Center; or 3) become a mobile site, which means that a proctor comes to the jail to administer the test. 45

All of the state prisons (except the privately owned one) became official testing centers, which involved purchasing computers that met certain requirements, loading the necessary software on the computers and establishing a qualified proctor/test administrator at each site. GED tests are downloaded on an administrative computer and transferred to student computers through a network since prison inmates’ computers cannot have access to the internet. However, even though this infrastructure was established by Jan. 2014, there were difficulties getting the software installed and the technology involved in test administration running smoothly. The state’s prisons were unable to offer any GED testing for the first five months of calendar year 2014. 46 Technological problems continue to come up that often make it difficult to offer exams as scheduled, and correctional settings do not have the flexibility an adult education center might have to make adjustments when things don’t go according to plan.

Meanwhile, local jails were overall very slow to make the new GED test available to inmates. A major issue is that because jailers are elected local officials, rules and requirements vary from facility to facility. Although all full-service jails must provide access to adult education, its availability varies significantly — for instance, adult education may be offered for six hours a week in one jail and two full days a week in another; some jailers allow inmates access to the internet for GED Ready testing; and some jails didn’t even have facilities sufficient for paper testing. While the state prisons became testing centers themselves, most of the local jails did not go this route (although some of the larger jails that have historically had a lot of GED diploma earners did become testing centers) – and some jail inmates did not have access to testing. To respond to this and other technology issues, the state’s Department of Corrections (DOC) and KYAE formed a work group on adult education and corrections for a three month period in early 2015 to provide recommendations to KYAE and DOC leadership.

Not having access to internet also limits the GED test preparation materials inmates (and instructors) can utilize. Inmates have access to some paper study materials, but adult education students outside of correctional settings benefit from a range of on-line test preparation options, including practice tests that assess which specific areas/skills a test-taker will need to strengthen before taking the GED Ready test. The GED Ready test itself provides students with such feedback, but the DOC has been limiting access to just those who will likely pass according to certain criteria such as word processing skills; this has to do with the cost of the 2014 GED Ready test being greater than the previous 2002 Official GED Practice Test. Recently, however, the DOC expanded access to the GED Ready test; part of the reason was that even when students do not pass it, they gain the important specific feedback about what they need to work on. 47

It has been challenging for the DOC to cover the new costs associated with the 2014 GED. For instance, in addition to setting up computer labs in the state’s prisons, additional staff time/persons have been needed to administer the test as well as maintain the computers and trouble shoot the inevitable technical problems that come up with computer based testing. To compound these resource issues, potential savings are lost with the decline in GED test pass rates in Kentucky’s correctional settings. Each inmate who earns a GED credential gets 90 days of “good time credit” – meaning he/she will be released 90 days early. Each 90 days of good time credit awarded ends up saving the state an estimated $34 a day (this cost estimate is very conservative as it is based on the cost of housing an inmate at a jail rather than a prison, which is more expensive). Such savings have declined from over $3.5 million in 2011 to just $385,560 in 2015. 48

It is critical that Kentucky’s inmates have the opportunity to earn a high school equivalency diploma. Education can help to reduce recidivism – the return of inmates to jails or prisons after release – by enabling more employment opportunities, for instance. 49 In Kentucky, around 30 percent of inmates are re-incarcerated within two years of release. 50 The issue of GED test access is also particularly important in correctional settings as there is a robust pipeline of Kentuckians who want to earn a GED diploma. 51

Increasing Kentucky’s GED Diploma Attainment

Kentucky has made some great gains in adult education, but the recent decline in GED diploma attainment with the implementation of the new test is concerning and needs to be further addressed for the future well-being of the state. Here are some ideas for actions that could be taken as Kentucky continues to navigate the still relatively new terrain of the 2014 GED:

Prioritize Adult Education in the 2016-2018 State Budget

The state is facing a very tight situation with the upcoming 2016-2018 budget, but it is important that adult education be a priority. Unfortunately KYAE – alongside most other areas of the state budget – has experienced cuts in recent years. As shown below in Figure 5, General Fund appropriations to KYAE for 2016 are now just $18.5 million, down from $25 million in 2008, which is a 26 percent drop even before adjusting for inflation. Meanwhile, there have been some new costs associated with the 2014 GED test – for instance setting up testing centers, which require computers with specific software and hardware requirements.

Figure 5

GED Figure 5

Source: Kentucky Adult Education.

In order for the state to more successfully navigate the new GED test in some of the ways described below (i.e., data collection, professional development for instructors, supports for adult education students and increased marketing efforts), KYAE needs to be adequately funded.

Collect and Report More Data

KYAE reports regularly on GED diploma numbers and other educational attainment goals; however, providing additional relevant information would be helpful for comprehending and addressing these numbers and the bigger picture of how the state is doing. Data on test-taking and passing by geographic location and demographic category (i.e., age, race/ethnicity) would be helpful to policymakers and analysts, for example. It would also be good to compile and report data on students’ progression toward a GED diploma – i.e., length of time preparing, grade/academic level when started, etc. – in order to better understand where students are leaving the pipeline. Some reporting of GED Ready test data could also be useful.

KYAE should also collect data from students and instructors on their experiences preparing for the new GED test (i.e., in terms of test content and any issues related to computer literacy). For example, KYAE could implement a survey or focus groups. CLASP published some useful findings from a survey of state adult education program administrators who spoke to the experiences of instructors and students with the new GED test, but it is important to get more first-hand information. 52 An example would be the qualitative study commissioned by KYAE in 1999 to understand the motivations and obstacles that influence educational decision-making among those who have not attended a GED or literacy program or who have not reached their educational goals. 53

KYAE emphasizes the importance of highly qualified instructors given the increased rigor of the test, and a survey of adult education programs (or other means of compiling this information) could give a better idea of the qualifications of the state’s instructors. A survey of instructor salaries – which are not set by KYAE – would also be useful as adequate compensation is often tied to recruiting and retaining highly qualified teachers. Such data could inform future guidelines for hiring instructors. In addition, adult education instructors could be surveyed about what professional development opportunities would help them better prepare students for the exam.

There are some good examples of adult education advocacy organizations using surveys to identify and address issues. For instance, Minnesota’s Literacy Action Network implemented a “Professional Issues Survey” of the state’s adult education professionals in 2012; analysis of the survey identified the need for more statewide trainings on Adult Basic Education assessments and more instructional resources, including around digital literacy – as well as ways their organization could help to address these issues (i.e., develop and offer trainings, provide outreach to programs about existing resources). 54 The group also surveyed state programs about salaries and benefits in 2009 so that programs would know how they compare to others in the state in terms of compensation. 55

Provide Additional Professional Development Opportunities

Additional resources for professional development could be used to further enrich KYAE’s offerings by bringing certain premier, nationally recognized professional development experts to Kentucky to work with the state’s adult education instructors and other staff.

Increase Supports for Adult Education Students

As described previously, Kentuckians without a high school diploma or GED credential often face challenges in their daily lives that can prevent them from attending adult education classes and taking and passing the GED test – including financial pressures, health problems and family responsibilities. Providing supports for adult education students can help keep them on track to earn a GED diploma. For instance, Jessamine County’s adult education program provides an academic advisor who follows up with students about their adult education needs and goals and can help connect students to various resources (including SNAP food assistance, etc.) that can help resolve potential barriers to taking the new GED test. A survey of supports in the state’s adult education programs – including childcare – would help to identify what may be working/needed across Kentucky. Such supports are likely especially critical for those potential GED test-takers who are especially hard to reach.

Increase Marketing Efforts

KYAE has done some innovative marketing – including partnering with social service providers and businesses – but it should boost its efforts given the recent challenges in GED credential attainment. 56 These efforts should be informed by market research in order to have the fullest impact on those who are the most difficult to reach.

Formally Study Alternative Tests/High School Equivalency Options

KYAE has been evaluating the alternative high school equivalency tests in a number of ways: The vice president for adult education co-chairs a national high school equivalency work group that includes members in states where HiSET and TASC are being administered; KYAE also hosted a focus group with adult education providers to discuss all three tests in Spring 2015. However, the state could further benefit from establishing a formal study group to collect and systematically analyze data on the implementation of all high school equivalency options – including TASC, HiSET and offering multiple tests – and provide recommendations. This is a good time for such a study, now that states have up to two years of experience with the alternative tests. States that offer multiple tests will be particularly interesting to examine in that they take more of a “no wrong door” approach to high school equivalency. Credit recovery options and the NEDP should also be explored in the current context.

Study Strategies for Recruiting and Retaining Hard to Reach

KYAE should conduct or commission a study on strategies for reaching those without a high school diploma who are difficult to recruit to adult education classes, building on the 1999 qualitative study on this population in Kentucky. Such a study would look for examples of successes in reaching and retaining these students in other states. Understanding how to engage this population/s is a critical part of improving GED diploma attainment in Kentucky, and this study would inform marketing and adult education program design.

Keep Working to Improve Access for Inmates

The DOC has been able to work out some of the technical and logistical issues involved in implementing the new GED. However, there is still room for improvement – especially given the consistent interest in adult education in the state’s inmate population. Greater state investment in inmate education as a whole would help to increase GED attainment and have a positive impact on the state.

Some states – like Ohio – did not see as substantial a decline in the number of GED credentials earned in their correctional system; in 2013 there were 2,121 GED diplomas earned, and in 2014 there were 1,754. 57 It is important to note that Ohio accomplished this without a transitional waiver to allow for paper/pencil testing. Kentucky should reach out to such states to learn what led to their success.

Invest in Career Pathways

KYAE has identified career pathways as a strategic approach for promoting GED diploma attainment – as well as higher education more broadly– for Kentuckians without a high school diploma. 58 Such an approach moves students quickly through adult education and GED diploma attainment and into college coursework and credential attainment in high demand fields. It could attract more Kentuckians to earn a GED credential as they would see it as an important stepping stone to a better career. Once a leader in career pathways, Kentucky would benefit from a recommitment to – and further investment in – this approach. 59

Implement Sustainable Financial Assistance for Test-Takers

It was a great move to use federal WIA funds for vouchers to cover the majority of the cost of taking the GED test, to prevent finances from being a barrier to GED diploma attainment in Kentucky. The state should look into subsidizing some or all of the cost of the GED test on a more permanent basis. In the meantime, it would be greatly beneficial if KYAE could continue to provide vouchers to cover the majority of the cost of the test, either through the current revenue source or a new one.


The 2014 GED test has brought with it challenges. GED graduation numbers are extremely low for this past year, and even with an uptick in recent months, the state has a lot of work to do to meet its adult education goals. GED diploma attainment is a critical part of increasing educational attainment in Kentucky, which is important to individuals’ ability to make ends meet as well as improving the state’s economy and reducing rates of recidivism. Strategic investments to increase GED graduates would be worthwhile and should be taken up by lawmakers, KYAE and the state’s DOC.

  1. The Kentucky Center for Economic Policy is a non-partisan initiative that conducts research, analysis and education on important policy issues facing the Commonwealth. Launched in 2011, the Center is a project of the Mountain Association for Community Economic Development (MACED) and is a member of the Working Poor Families Project, a national initiative funded by the Annie E. Casey, Ford, Joyce and Kresge foundations that advances state policies in the areas of education and skills training for adults; economic development; and income and work supports. Visit KCEP’s website at
  2. Working Poor Families Project, Population Reference Bureau, analysis of 2013 American Community Survey.
  3. Working Poor Families Project, Population Reference Bureau, analysis of 2013 American Community Survey.
  4. Current Population Survey, U.S. Bureau of Labor Statistics, U.S. Department of Labor.
  5. Georgetown University Center on Education & the Workforce, “Projections of Jobs and Educational Requirements through 2020,” State Report, 2013,
  6. Working Poor Families Project, 2013 American Community Survey microdata.
  7. Reecie Stagnolia, “Briefing on Kentucky’s Adult Education System,” Kentucky Council on Postsecondary Education presentation to the Subcommittee on Postsecondary Education, Aug. 10, 2015.
  8. Kentucky Adult Education analysis of 2014 American Community Survey data.
  9. Kentucky Adult Education, personal communication.
  10. GED Testing Service, “2014 GED Test Performance Standards,”
  11. Kentucky Educational Television, “2002/2014 GED Test Comparison,” GED Testing Service, “The 2014 GED Test Specifications,”
  12. GED Academy, “2014 GED Test Curriculum Blueprint,” 2013,
  13. National Council of State Directors of Adult Education, “The Decennial Scurry,” March 3, 2015,
  14. 2012 numbers are used to compare to 2014 instead of 2013 number due to the surge in test-taking in 2013, right before the new exam was implemented. Barry Shaffer, “The Changing Landscape of High School Equivalency,” CLASP, Center for Postsecondary and Economic Success, May 2015,
  15. Kentucky Adult Education, personal communication.
  16. GED Eligibility Requirements,” 13 KAR 3:050,
  17. Carol Clymer, “Preparing for the New GED Test: What to Consider Before 2014,” Working Poor Families Project, Fall 2012,
  18. Kentucky Adult Education, personal communication.
  19. Kentucky Adult Education, “Professional Development Handbook July 1, 2015 – June 30, 2016,”
  20. Kentucky Adult Education, “Current Adult Education Standard Operating Policies and Procedures Manual,” July 1, 2015,
  21. Duy Pham, Frank Waterous and Rich Jones, “Expanding Opportunity: The Need for Multiple High School Equivalency Assessment Options in Colorado,” The Bell Policy Center, Dec. 2015,
  22. Kentucky Adult Education, “Introducing Kentucky’s GED Express!,” Feb. 5, 2015,
  23. Kentucky Adult Education, “GEDWorks Program Announcement,” Oct. 29, 2015,
  24. Shaffer, “The Changing Landscape of High School Equivalency.”
  25. Kentucky Adult Education, personal communication.
  26. Shaffer, “The Changing Landscape of High School Equivalency.”
  27. GED Testing Services, “Computer based Testing Comparability Study,” 2011, Shaffer, “The Changing Landscape of High School Equivalency.”
  28. Indiana Adult Education, “2015 High School Equivalency Test,” presentation at 2015 IAACE Conference, April 30, 2015,
  29. Lauren Slagter, “Test Participation, Pass Rates Drop with New High School Equivalency Test,” Kokomo Tribute, April 21, 2015,
  30. Board of Regents of the University of the State of New York, Summary of the Feb. 2015 Meeting, March 9, 2015, GED Testing Service, “2012 Annual Statistical Report on the GED Test,” 2013,
  31. Sam Levin, “How the New GED is Failing Students,” East Bay Express, June 3, 2015,
  32. Working Poor Families Project, Population Reference Bureau, analysis of 2013 American Community Survey.
  33. Shaffer, “The Changing Landscape of High School Equivalency.”
  34. Shaffer, “The Changing Landscape of High School Equivalency.”
  35. Stagnolia, “Briefing on Kentucky’s Adult Education System.”
  36. Jane Jensen, Diana Haleman, Beth Goldstein and Eric Anderman, “Reasonable Choices: Understanding why Under-educated Individuals Choose not to Participate in Adult Education,” 2000,
  37. Stagnolia, “Briefing on Kentucky’s Adult Education System.”
  38. Stagnolia, “Briefing on Kentucky’s Adult Education System.”
  39. Calculation based on 53 percent of Kentuckians without a high school diploma being 18 to 44. Stagnolia, “Briefing on Kentucky’s Adult Education System.” Working Poor Families Project, Population Reference Bureau, analysis of 2013 American Community Survey.
  40. Stagnolia, “Briefing on Kentucky’s Adult Education System.”
  41. Ryland Barton, “After First Year of New Test, GED Diplomas Drop by 77 Percent,” Aug. 11, 2015,
  42. Jensen et al., “Reasonable Choices.”
  43. Ryland Barton, “GED Diplomas To Kentucky Inmates Drop 89 Percent,” Aug. 24, 2015,
  44. Kentucky Department of Corrections, personal communication.
  45. Rae Smith, “GED Testing in Correctional Settings: Finding Answers,” Kentucky Adult Education, Webinar,
  46. Kentucky Department of Corrections, personal communication.
  47. Kentucky Department of Corrections, personal communication.
  48. Kentucky Department of Corrections, personal communication.
  49. Lois Davis, Jennifer Steele, Robert Bozick, Malcolm Williams, Susan Turner, Jeremy Miles, Jessica Saunders and Paul Steinberg, “How Effective Is Correctional Education, and Where Do We Go from Here?,” RAND Corporation,
  50. Bureau of Justice Assistance, U.S. Department of Justice, “State Criminal Justice Profile: Kentucky,”
  51. Ashley Spalding, “Improving Reentry in Kentucky through Education and Supports for Inmates and Ex-Offenders,” Kentucky Center for Economic Policy, Aug. 13, 2013,
  52. Shaffer, “The Changing Landscape of High School Equivalency.”
  53. This study enhanced Kentucky Adult Education’s perception of the barriers to reaching potential adult education students, although it did not necessarily result in any specific actions by KYAE. Jensen et al., “Reasonable Choices.”
  54. For instance: Literacy Action Network, “Professional Issues Survey – Summary of Results and Committee Response,” Summer 2012,
  55. Literacy Action Network, “2009 Salary Survey,”
  56. Kentucky Adult Education, “Best Practices – Marketing, Recruitment, Retention and More,”
  57. John Kasich, Gary Mohr and Denise Justice, “Ohio Central School System 2013 Annual Report,” Department of Rehabilitation and Correction, John Kasich, Gary Mohr and Denise Justice, “Ohio Central School System 2014 Annual Report,” Department of Rehabilitation and Correction,
  58. Stagnolia, “Briefing on Kentucky’s Adult Education System.”
  59. Ashley Spalding, “Developing the Healthcare Workforce: Growing Need is an Opportunity for Kentucky,” Jan. 2015,

New Commitment to Need-Based Financial Aid Critical in Context of Rising Tuition

The cost of public higher education in Kentucky has risen by more than 200 percent in the last 15 years, but the state’s financial aid programs have changed very little in response. As a result, the financial aid system does not fully recognize the importance of need-based aid to helping low-income students (a substantial portion of whom are adults) obtain degrees and credentials at a time of higher cost. Kentucky can strengthen the well-being of many thousands of its families and improve the state’s economy through reforms that make a new commitment to need-based financial aid.

New Commitment to Need-Based Aid

state financial aid by income graph