KY Policy Blog

State’s Mental Health System Has Experienced Severe Funding Shortfalls

By Jason Bailey
April 5, 2013

Discussion of the news that Seven Counties Services, a community mental health center in Louisville, plans to file for bankruptcy should include a look at the chronic lack of state funding for behavioral health over the last couple decades. The state’s community mental health centers have been hit by a combination of state General Fund budget cuts, frozen Medicaid reimbursements and the underfunding of pension liabilities.

In 1966, Kentucky passed legislation to implement President John F. Kennedy’s Community Mental Health Act. The state established local centers that provide treatment and read more

Higher Minimum Wage Is Good for Kentucky Workers and the State’s Economy

By Anna Baumann
April 3, 2013

Raising the federal minimum wage to $10.10 an hour would lift the wages of over one in four Kentucky workers and add $546 million over three years to the Kentucky economy, according to a recent report by the Economic Policy Institute (EPI).

The report looks at how the Fair Minimum Wage Act of 2013 – which proposes to raise the minimum wage incrementally to $10.10 by 2015, index it to inflation and raise the tipped minimum wage to 70 percent of the regular minimum wage – would affect workers and read more

Expanding Medicaid is a Good Move for Kentucky

By Ashley Spalding
March 29, 2013

Expanding Medicaid through the Affordable Care Act (ACA) is a good move for Kentucky. More than half of the state’s uninsured stand to benefit. It would have a positive impact on the state’s economy while costing the state very little. And the majority of Kentuckians are in favor of the Medicaid expansion.

It’s Good for Workers

Despite being employed, a large share of low-wage workers cannot afford health insurance and do not qualify for Medicaid. They struggle just to make ends meet and cover their basic expenses. Being uninsured means read more

Pension Revenue Bill Provides Modest Resources to Address Budget Challenges

By Jason Bailey
March 28, 2013

The pension revenue bill that passed the General Assembly this week provides only an estimated $31.7 million in net new state revenue to help address Kentucky’s budget needs. House Bill 440 combines General Fund revenue tweaks and a Road Fund tax cut.

While official documents identified $95.7 million in new General Fund monies, $30 million of what is counted in that amount is expected revenue from federal tax law changes and not because of House Bill 440. Also, the bill cuts $34 million from the Road Fund by providing a read more

Ryan Budget Would Mean Substantial Funding Cuts in Kentucky

By Anna Baumann
March 27, 2013

House Budget Committee Chairman Paul Ryan’s budget—which the House passed by a slim margin last week—would cut funding to state and local governments in Kentucky by an estimated $301 million in the coming year and $3 billion over the next 10 years, according to a report released today by the Center on Budget and Policy Priorities.

The report is based on the assumption that the federal government would cut funding to state and local governments by the same 18 percent over the next 10 years that Ryan’s budget would slash read more

Kentucky Remains Long Way from Employment Recovery

By Jason Bailey
March 21, 2013

New estimates show that Kentucky has added on average 1,500 net new jobs a month for the last six months and 1,525 a month for the last year. So far, the recovery is only very slowly shrinking the state’s jobs deficit, the gap between the jobs we have and the jobs we need to replace those lost in the recession and catch up with growth in the population.

At the worst point in the recession, Kentucky had lost an estimated 118,300 jobs. We have since gained back 85,700 of those read more

Revenue Recovery from Great Recession is Slow

By Jason Bailey
March 20, 2013

The debate over pensions in Frankfort hinges in part on whether the state should raise additional revenue to help make the pension payment or dig into the rest of the budget to find the funds. The weakness of the current economic recovery is one reason more revenues simply must be generated.

Just how slow is our recovery from the Great Recession? The figure below compares revenue growth in inflation-adjusted General Fund dollars after the current recession and after the last recession in 2001. The 2001 recession was not nearly as read more

Not Paying Pension Bills Adds Up

By Jason Bailey
March 15, 2013

A major contributor to Kentucky’s pension funding problem is the legislature’s failure to make the full required contribution to the retirement system in recent years.

Shortfalls in payments started as early as 1993, but began in earnest in 2004. As the first figure below shows, the state has shortchanged the pension system by at least $100 million a year since 2007.

 Annual Shortfalls

Source: KCEP analysis of Kentucky Retirement Systems data. Analysis is for Kentucky Employees Retirement System Pension Fund only.

Added up, the shortfalls total $1.8 billion, as shown in the read more

Retirement System’s Investment Return Assumption is Reasonable

By Jason Bailey
March 8, 2013

One concern being raised in Frankfort about the existing defined benefit pension plan is that if the retirement system does not meet its expected rate of return of 7.75 percent per year, the cost to the state goes up. This concern is usually expressed by those who favor moving to a cash balance or defined contribution plan for new employees.

But a 7.75 percent return is in fact a reasonable assumption given historic performance and the realities of the market today, as explained by economist Dean Baker in recent testimony read more

New Projections Say Senate Pension Bill Is $206 Million More Expensive than House Plan

By Jason Bailey
March 2, 2013

The Senate version of pension legislation will cost $206 million more than the House version over the next 20 years according to analysis of the new actuarial projections for Senate Bill 2.

The Senate plan would cost state government $59 million more than the House plan and is $147 million more expensive for local governments than what the House proposed, resulting in a total cost increase of $206 million. The projections come from the retirement system’s actuary, Cavanaugh Macdonald.

Earlier analysis projected that switching to a hybrid cash balance plan read more