KY Policy Blog

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

Lottery Funds Not Adequately Supporting State Financial Aid Programs

By Ashley Spalding
February 27, 2013

The House has recently identified new lottery funds as a potential source of revenue to help pay down Kentucky’s pension liability. Whatever happens with that proposal, it’s important to understand that the student financial aid programs that currently receive almost all of the lottery revenue are already substantially underfunded.

Capping the monies for college scholarships, even while allowing up to 2 percent annual growth as proposed by the House, would mean that our neediest students would continue to be turned away for financial aid. More dollars are needed both to read more

Gambling Revenues Are No Substitute for Tax Reform

By Jason Bailey
February 27, 2013

The House has proposed generating new revenues for the state pension system by expanding the lottery and utilizing revenues from instant racing. However, the plan generates only a portion of the funds needed to make the annual pension payment, while gambling revenues tend to grow slowly over the long-term. If such a proposal advances, it should not replace the need for state tax reform that generates additional and sustainable revenues.

According to the speaker’s February 26 presentation on the proposal, the House does not expect these new gambling options to read more