Division of the Budget
Landon State Office Building Phone: (785) 296-2436
900 SW Jackson Street, Room 504 adam.c.proffitt@ks.gov
Topeka, KS 66612 Division of the Budget http://budget.kansas.gov
Adam C. Proffitt, Director Laura Kelly, Governor


March 7, 2024


The Honorable Adam Smith, Chairperson
House Committee on Taxation
300 SW 10th Avenue, Room 346-S
Topeka, Kansas 66612
Dear Representative Smith:
SUBJECT: Fiscal Note for HB 2701 by House Committee on Education
In accordance with KSA 75-3715a, the following fiscal note concerning HB 2701 is
respectfully submitted to your committee.
Under current law, public or private school teachers are allowed to claim a tax credit for
the amount equal to the expenditures made for school and classroom supplies up to $250 during
the taxable year. HB 2701 would increase the maximum amount of the tax credit to $500 in tax
year 2024 and would allow an individual employed by a school district or private school as a
teacher, administrator, counselor, psychologist, librarian, occupational therapist, physical
therapist, speech language pathologist, or paraprofessional to qualify for this tax credit. The
maximum tax credit amount would be adjusted annually by the cost-of-living adjustment published
in the Internal Revenue Code beginning in tax year 2025.

Estimated State Fiscal Effect
FY 2024 FY 2025 FY 2026
Expenditures
State General Fund -- $72,009 $61,760
Fee Fund(s) -- -- --
Federal Fund -- -- --
Total Expenditures -- $72,009 $61,760
Revenues
State General Fund -- ($3,600,000) ($3,800,000)
Fee Fund(s) -- -- --
Federal Fund -- -- --
Total Revenues -- ($3,600,000) ($3,800,000)
FTE Positions -- 1.00 1.00
The Honorable Adam Smith, Chairperson
Page 2—HB 2701

The Department of Revenue estimates that HB 2701 would decrease State Geneal Fund
revenues by $3.6 million in FY 2025, $3.8 million in FY 2026, and $4.0 million in FY 2027. To
formulate these estimates, the Department of Revenue reviewed data on school and classroom
supplies tax credit claims from tax year 2022. Currently 99.2 percent of tax credits claimed are
allowed against tax liability. Based on Kansas Department of Education school personnel data, it
is expected that newly allowed employees will increase claims by 15.0 percent. The fiscal note
assumes the tax credit will be claimed a similar rate with the higher tax credit amount and accounts
for the additional individuals that qualify for this tax credits. The fiscal note assumes that inflation
will increase by 2.5 percent which will allow the annual maximum tax credit amounts to increase
by 2.5 percent each year.
The Department indicates that the bill would require $72,009 from the State General Fund
in FY 2025 to implement the bill and to modify the automated tax system. The bill would require
the Department to hire 1.00 new Customer Service Representative FTE position to answer
questions from taxpayers. The Department estimates that ongoing expenses for salaries and wages
for the 1.00 new FTE positions would total $61,760 from the State General Fund in FY 2026. The
required programming for this bill by itself would be performed by existing staff of the Department
of Revenue. In addition, if the combined effect of implementing this bill and other enacted
legislation exceeds the Department’s programming resources, or if the time for implementing the
changes is too short, additional expenditures for outside contract programmer services beyond the
Department’s current budget may be required.
The Department of Education indicates the bill would have no fiscal effect on its
operations. Any fiscal effect associated with HB 2701 is not reflected in The FY 2025 Governor’s
Budget Report.

Sincerely,

Adam C. Proffitt
Director of the Budget


cc: Lynn Robinson, Department of Revenue
Gabrielle Hull, Department of Education
Angie Stallbaumer, Kansas Association of School Boards


Statutes affected:
As introduced: 79-32