School buses are essential to getting kids to and from school. In recognition, the General Assembly created a law as part of the 1990 Kentucky Education Reform Act (KERA) that requires the state to fund the cost of school district transportation based on a formula. But for more than 20 years, the General Assembly has not met its obligation under this law, suspending the statute in every budget since 2005 to provide an amount less than required.
The legislature has taken steps in recent sessions to begin restoring that funding. But as of now, that progress is stalled and underfunding will continue in the next two-year state budget unless changes are made to HB 500, the House budget bill that passed the chamber last week. It freezes school transportation funding and therefore underfunds it by $93 million each year. Restoring full funding of transportation is a key step toward meeting the state’s constitutional obligation to adequately and equitably fund Kentucky public schools.
State has not followed transportation funding law for over 20 years
The General Assembly has established in law requirements for the state to reimburse school districts for a large part of the costs of student transportation. This requirement is part of the school funding formula known as Support Educational Excellence in Kentucky (SEEK) created as part of KERA. The formula is based on attendance of students that use the bus, district transportation spending, pupil geographic density and bus depreciation costs. It provides funding in a way that incentivizes districts to supply transportation services efficiently.
Actual appropriation levels as a share of the law’s requirement are shown in the graph below. The state’s contribution fell to as low as 55% of the requirement in 2020 before rising to 82% in 2026. Despite this progress, in 2026 the shortfall meant districts are still missing out on $89 million. Since 2005, the shortfalls total $2.58 billion in missing state appropriations.
In late February or early March each year, the Department of Education publishes district and state-wide SEEK transportation costs according to the law’s formula on its website. On March 1, 2024, transportation costs were calculated at $484 million. Lawmakers then passed a budget on March 28 of that year that suspended the law and appropriated only $399 million for transportation in 2026 (which is the amount calculated in February of 2023 rather than the significantly higher most recent calculation).
Since then, the Department of Education posted the updated cost of $488 million on Feb. 25, 2025 and then the new calculation of $492 million on Feb. 27, 2026. However, the current version of the House budget (HB 500) still funds SEEK transportation at the 2023 calculated cost of $399 million for 2027 and 2028. That means that 81% of school transportation costs are funded in the House budget, a shortfall of $93 million.
Rural and poorer counties rely more heavily on transportation support
While nearly all districts are harmed by this underfunding, several factors make certain districts particularly vulnerable. Higher costs are faced by rural schools whose road systems necessitate more complex transportation costs, poorer districts that have more students who ride the school bus, and districts that must pay more to attract and retain bus drivers. Whereas transportation costs in Anchorage Independent, a small and wealthy district, are $0 per student, costs are $1,910 per student in Carter County. For the state, transportation costs make up 5% of school expenses. But costs are at least 9% in Carter, Harlan, Hardin, Lewis, Livingston and Bracken counties. See the map below for pupil transportation costs by district.
Local districts pay growing share of bus costs and costs are rising
Even if fully funded, the SEEK formula does not pay all district transportation costs. And as the legislature has failed to meet its statutory obligation, local school districts have had to pick up a growing share. Whereas the state once paid upwards of 80% of all costs, now the majority is covered by local schools.
School transportation costs have increased dramatically across the country in recent years, including because of higher bus prices, insurance costs, maintenance expenses, fuel costs and wage pressure due to pandemic-era labor shortages. Kentucky school costs for transportation increased 32% between 2019 and 2024, making the state’s SEEK funding shortfall an even bigger problem for districts.
