KY Policy Blog

Pension Framework Makes Harsh Benefit Cuts, Adds Costs Without New Revenue

By Jason Bailey
October 18, 2017

The governor and legislative leaders released a framework today that makes substantial cuts to pension benefits for current workers, new employees and even retired teachers. It includes a shift to a 401k-type defined contribution (DC) system for future employees that is no cheaper than the current pension plan but will reduce retirement security and make it harder to attract and retain a skilled workforce. In addition, the framework calls for big new contributions to the plans without any new tax revenue to make that possible.

Major aspects of the proposal read more

Report Shows Kentucky’s Preschool and Kindergarten Programs Effective, Need Greater Investment

By Ashley Spalding
October 16, 2017

High quality early childhood education has long been understood to be an important investment with a significant return. While our state has done more in recent years to expand access to preschool and full-day kindergarten, a new report from the state Legislative Research Commission shows there is real need for additional investments.

Preschool

The report describes how effective our state’s preschool program is at preparing children for kindergarten — especially those from low-income households or who have disabilities. However, while full-day preschool is shown to be most effective just 40 read more

Group Provides Insight Into Growth of Kentucky’s Inmate Population

By Ashley Spalding
October 13, 2017

The Kentucky Justice Reinvestment Work Group, which held its third meeting this week, plans to propose criminal justice reforms in December for consideration during the 2018 General Assembly. The first step in this process involves exploring in-depth the drivers of our state’s high inmate population, with technical assistance from the Crime and Justice Institute (CJI) at Community Resources for Justice — an organization that has had success helping Louisiana and Alaska identify meaningful and cost saving reforms.

Our state’s criminal justice system is certainly in need of reform. As noted read more

Social Security Disability Insurance Works for Vulnerable Kentuckians

By Dustin Pugel
October 13, 2017

There are many misconceptions about Social Security Disability Insurance (DI). Despite recent arguments that DI is a hindrance to people’s wellbeing and the commonwealth’s economy, it is instead a vital lifeline for Kentuckians who, after working most of their lives, have their careers cut short due to a severe disability.

Natural population changes, not “culture,” caused rise in Disability Insurance

While some argue the considerable increase in DI beneficiaries in Kentucky is the result of a deficient culture that doesn’t value work, the data does not support this.  The rise read more

Pension Legislation Should Solve Real Problems and Avoid Harmful Consequences

By Jason Bailey
October 6, 2017

Legislative leaders say they will soon share a framework for potential pension legislation the General Assembly will consider in a special session this fall. Big questions loom over the legislation, including the following:

Will it actually reduce the existing unfunded liability Kentucky must pay down over time —the main pension challenge the state faces? While legislators now say they will protect past cost of living adjustments for those already retired, will the bill also avoid breaking promises to current employees? Will it raise costs in the near term through dramatic read more

Level Dollar Approach Shifts Enormous Burden to Upcoming Budget

By Jason Bailey
October 5, 2017

The proposed level dollar approach to funding Kentucky’s pension liabilities would shift a large burden to our upcoming state budget and ask comparatively little from budgets a couple of decades from now. Especially without any new revenue, the method creates pressure for harsh and unacceptable benefit cuts to retirees and workers along with unnecessarily damaging budget cuts that will further undermine key services.

This proposal to pay down all plans’ liabilities under a level dollar method comes from state consultant PFM. Under the approach, payments would be about the same read more

Federal Tax Cut Framework Is Designed for Millionaires

By Anna Baumann
October 4, 2017

Under the tax framework released last week by the Trump administration and Congressional leaders, the wealthiest 1 percent of Kentuckians would get 49.5 percent of the total tax cut received by people in the state, according to a new report by the Institute on Taxation and Economic Policy (ITEP). Though the proposed framework has been hailed as a tax break for the middle class, the report finds it would redistribute massive amounts of wealth upward, while raising taxes for some and worsening income inequality nationwide.

The plan’s cuts are extremely read more

5 Things Kentuckians Need to Know About Federal Budgets Being Voted on This Week

By Ashley Spalding
October 3, 2017

This week both the U.S. House and Senate are expected to vote on budget proposals that would have a devastating impact on Kentuckians. The full House will be voting on its budget resolution, which passed committee in July. The Senate will be “marking up” its recently released budget as well, a process of considering the plan in committee with the opportunity to make changes before the committee votes. In both budgets, critical investments in our state are at risk — and with Kentucky more heavily reliant on federal spending than read more

Kentucky Will Face Transition Costs If It Switches to 401ks

By Jason Bailey
October 3, 2017

Proponents are claiming Kentucky will face no transition costs from shutting down its defined benefit (DB) pension plans and moving employees into 401k-type defined contribution (DC) plans. That assertion ignores why there are transition costs from closing a plan.

DB plans are pre-funded, as the governor’s staff recently noted in an email to the General Assembly that cited an article from the Reason Foundation. Being pre-funded means DB plans are not designed for new workers to directly pay for the benefits of retired workers. Looking at that fact alone, one read more

Medicaid Works for Kentucky

By Dustin Pugel
October 3, 2017

Medicaid provides health care coverage to over 1.4 million Kentuckians. For over 50 years it has helped pregnant women, children, people with disabilities and seniors and in the past 3 years it has allowed all low-income Kentuckians under 138 percent of poverty to get care when they need it. This critical health program has been at risk in 2017 for severe cuts under healthcare repeal efforts in Congress, and will face continued threats for more cuts through the federal budget process and the changes to Kentucky’s Medicaid program proposed to read more