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Here's What Is Still Undecided In Kentucky Budget Talks

Lawmakers are hammering out what they hope will be a final version of the state budget this week. The bill will need to pass both legislative chambers before it heads to Gov. Matt Bevin’s desk.

Leaders from the Democratic-led House and Republican-led state Senate are negotiating down to the wire, with plans to submit the spending plan to Bevin on Wednesday.

The two chambers will have to find compromise on differing plans to start fixing the state's ailing pension systems, fund higher education and decide which programs to cut to free up already strained resources.


The Senate budget is similar to Bevin’s proposal to cut state spending by 9 percent over the next two years and set aside money for the pension systems.

Republicans criticized the House’s version for taking $500 million in so-called “extra money” from the State Employee Health Insurance fund and putting it toward the teacher pension system and education.

The Senate plan — like Bevin’s — takes that money and sets it aside in a newly devised “permanent fund” for future expenses in the pension systems.

Jim Carroll, a spokesman for an advocacy group called Kentucky Government Retirees, said he likes the Senate’s plan because it sets more money aside for the retirement fund for most state employees.

“The Senate has come up with a plan to put more money in right up front, and we think that’s preferable for our particular plan since it’s in such bad shape," he said.

Kentucky Employees Retirement Systems' non-hazardous fund — which includes most state workers — has only 17 percent of the money it needs to meet future expenses.

Carroll and others worry that if the system loses any more money, the plan will become “pay as you go,” meaning all its assets will have been sold and the state will just be paying retirement checks straight out of its pockets.

In its budget proposal, the House sets aside $89 million for the non-hazardous fund, while the Senate contributes $215 million with plans to add an extra $67.9 million if the state has a surplus.

Carroll said the House’s budget won’t work for his fellow retirees.

“If we come out of this with something akin to the House plan, then this was as wasted session, just not enough money to have an impact,” he said.

Meanwhile, the House plan would put more than $1 billion into the Kentucky Teacher Retirement Systems, which is 45 percent funded but requires larger contributions to stay above water.

The Senate version would set aside $846 million for KTRS over the two-year budget plan, again with an extra $67.9 million contingent on a state surplus.

Higher Education

The House’s budget proposal would restore about $215 million in cuts Bevin had proposed to the state's higher education institutions. The Senate added those cuts back in and imposed a performance-based funding model.

Under the Senate plan, schools would be separated into three tiers and compete over $204 million in funding (University of Kentucky and University of Louisville in one tier, regional schools in the second tier, and community colleges in the third).

Meanwhile, the House budget would set aside $33 million for the Work Ready Kentucky scholarship program, which would provide free tuition to Kentucky high school graduates who enroll in state community colleges.

The Senate deleted that proposal.

What To Cut?

All three budget plans would reduce most state spending by 9 percent over the next two years, with exceptions including the K-12 funding formula and Medicaid.

However, their plans differ in how they fund certain programs.

Bevin proposed setting aside funds to add 44 lawyers to the Department of Public Advocacy’s ranks of 333 public defenders. The House agreed with that proposal but the Senate removed it.

The Senate version also would remove $1.5 million from the Court Appointed Children’s Advocates (CASA) program, $15 million in loans for renovations to Kentucky School for the Blind and $2 million a year from breast and cervical cancer screenings.

Sen. Denise Harper-Angel, a Democrat from Louisville, passed her vote on the Senate’s version of the budget, saying she hoped for “better choices” in the final version.

“I believe these cuts will adversely affect women, children, families and the disabled. For these reasons and more, I pass,” she said.

The Senate version included about $12 million more than the House to combat heroin abuse in the state.

The Senate also agreed with Bevin’s proposal to reduce funding to constitutional officers — those offices held by the Attorney General, Secretary of State, Agriculture Commissioner, Auditor and Treasurer. The House restored that funding.

Lawmakers are planning to compromise on budget terms Monday night with a goal of getting the document to Bevin’s desk on Wednesday.

Bevin will have a week and a half to review the budget. Lawmakers would have one day to override any vetoes when the legislature wraps up on April 12.

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