A Legislative Perspective on the Kentucky General Assembly with State Representative Rick Rand
FRANKFORT – Like most other states, and many local communities as well, Kentucky is facing a serious challenge when it comes to the long-term viability of our public retirement systems.
They were more than fully funded as recently as a dozen years ago, but the country’s two recessions since then have taken a significant toll, much as they have with the retirement plans for millions of Americans.
The General Assembly began tackling this issue in 2003, and followed that up with more significant reforms in 2008. While those have helped significantly, it has become clear in recent months that we need to do even more to head off a crisis that, if left unchecked, could have severe repercussions just a few years down the road.
On Wednesday, the House offered its proposal to keep that from happening. We take a two-pronged approach by recommending some needed reforms and setting a prudent path to pay down the liability while working to make sure it can never grow as large again.
That payment plan would raise hundreds of millions of dollars over the next decade – without any new taxes – and be a permanent source of revenue, which the bond companies say we should have if we do not want to risk higher borrowing costs for such things as schools, roads and other infrastructure.
This is a key difference from the Senate plan, which does not recommend any source of funding other than using the budget’s own minimum growth. In addition to not addressing the bond company concerns, the Senate plan will absorb tens of millions of dollars that we need for our schools and other critical programs in the wake of $1.6 billion in cuts during the last five years. Per-pupil funding for students, for example, has not seen an increase since 2008.
In addition to not raising taxes, the House plan does not take away any benefits that state and local government employees and their retirees have already earned, as has been the case in other states.
Our plan is able to accomplish this by relying on growth from two markets poised to take off: the Kentucky Lottery, which is considering expanding sales online and adding the fast-paced game of keno; and instant racing, which is now offered at the horse tracks in Franklin and Henderson.
Current law allows the lottery to take these steps, and the Kentucky Supreme Court is weighing whether to uphold lower court rulings that have already found instant racing to be legal. So far, these two tracks have seen about $220 million wagered in the last 17 months, and other tracks are expected to follow suit if the courts ultimately confirm that there is no problem.
We have estimated that the additional money from these two revenue sources could bring in about $800 million to the state over the next decade while not harming such popular programs as the lottery-based scholarships students receive. While we would still have to dedicate more state revenue to meet the state’s full pension payment during this time, there is no doubt this approach would make it much easier to fund our schools and other needed programs.
As for the retirement systems themselves, the House is proposing a limit on cost-of-living allowances unless the state can afford them and establishing reasonable time periods before a retiring government employee could return to work for the state or a local government. Another key point is that we want more oversight of the Kentucky Retirement Systems, so that we can be sure its investments are performing as well as possible. It’s also important to note that none of these actions would affect teachers.
House and Senate leaders will now work to see if they can find a reasonable compromise by early next week, when the General Assembly will leave for a brief veto recess before returning later this month for the session’s final two days.
While the debate on pensions was understandably the biggest topic of the week, there were several other bills making it through the House that are important as well. They would:
· Tweak last year’s “pill mill” legislation that is already having a positive impact on reducing prescription drug abuse. This legislation will work in tandem with the regulations enacted by physician licensing boards, and is expected to pass the Senate easily.
· Make it easier for healthcare providers to resolve unpaid claims tied to Medicaid. This legislation will do that by giving the state’s Dept. of Insurance more oversight of payment disputes with the Medicaid managed care organizations.
· Increase school safety by standardizing emergency plans and making law enforcement more aware of what those plans include.
· Establish an external child fatality and near fatality review panel to investigate cases in which a child either died or was severely injured from abuse or neglect. This panel would review state and local records and determine if officials could have done more.
· Help make it easier from those who served in the military to become firefighters or EMTs if their military training was in those fields.
I want to thank everyone who has contacted me this legislative session and encourage others to join them as we approach its final days. My address is Room 366B, Capitol Annex, 702 Capitol Avenue, Frankfort, KY 40601. My email address is Rick.Rand@lrc.ky.gov.
You can also leave a message for me or for any legislator at 800-372-7181. For those with a hearing impairment, the number is 800-896-0305. More information can be found on the General Assembly’s website: www.lrc.ky.gov.
I hope to hear from you soon.