Budget crafted by House Democrats restoring higher education cuts passes out of committee

The House Appropriations and Revenue Committee passed a version of the budget Tuesday evening that would restore cuts made to higher education and funds pensions at a higher level than originally put forth and more.

Maintaining a focus on helping the state’s woefully underfunded pension systems, the House Democrats explained Tuesday that their budget will exceed the actuarially required contribution (ARC) for the Kentucky Retirement System, which was also laid out by the governor. The new proposal also meets the full ARC for the Kentucky Teachers’ Retirement System (KTRS) by using funds that were being set aside in Gov. Matt Bevin’s version of the budget.

Along with hearing the committee substitute that contained the House Democrats’ budget proposal, the House A&R Committee also heard House Bill 1, the bill originally seeking to bond $3.3 billion to shore up KTRS.

However, it was explained in the committee meeting that House Bill 1 had been amended to strip the original language and instead now calls for meeting 100 percent of the ARC for KTRS in this budget through general fund appropriations with no borrowing.

To do this, the House Democrats are depleting the $500 million, composed of excise health insurance premiums for public employees, set aside in Bevin’s budget which he has called a “permanent fund” to be used for pensions in the future. 

The budget proposal from the Democratic majority in the Kentucky House of Representatives restores 9 percent cuts made to higher education in the budget proposal laid out by Gov. Matt Bevin. House Democrats also removed the performance-based funding piece of Bevin’s proposal, stating there have been no perimeters laid out to deal with that issue.

While funding is restored to current levels for the state’s universities in this proposal, equity funding for WKU and NKU has been removed. That funding was suggested by the Council on Post-Secondary Education and put in Bevin’s budget to put the two schools on a level playing field with the other universities.

Work Ready scholarships, an initiative proposed by the House Democrats, is also funded in their version of the budget.

A $100 million dollar bond pool for workforce proposed by Bevin, however, has been removed in this version of the budget.

Because of the lack of that bond, the House Democrats touted their budget contains less debt than the one put forth by Bevin.

The Democratic majority used 100% of the revenue estimate to craft their budget while Governor Bevin had used a more conservative estimate in event of economic slowdown. 

The “rainy day” fund was estimated to have over $523 million by the end of fiscal year ’18 in Bevin’s proposal will be reduced to $283 million under the House proposal.

The savings Bevin had accumulated through budget cuts in most departments of state government were restored in some areas such as preschool, and budget provisions proposed by Governor Bevin such as eliminating prevailing wage were deleted in this version of the budget. 

Meanwhile, pay increases for State Police and social workers were retained. 

In the committee meeting, House Republicans were given time to explain their budget proposal released Tuesday morning and receive a vote on that proposal. However, after hearing the majority’s presentation on their budget substitute, the House GOP said a vote on their vote on their amendment was not necessary and noted the two groups were very close on many fronts. The meeting was very cordial while most Republican members passed on the vote to have more time to review the language but commended the majority’s efforts. 

The House is expected to vote on this version of the budget Wednesday afternoon in that chamber’s orders of the day. Check back on The Bottom Line tomorrow for the details.

Categories: 2016 General Assembly, Education, Pensions, Taxes & Budget, Workforce Development

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