A budget proposal from the Senate Republican Majority unveiled Wednesday will fund Kentucky Employees Retirement Systems (KERS) and Kentucky Teachers’ Retirement System (KTRS) at the highest levels put forth in the budget process thus far and sets money aside in two “savings” accounts, as well as meets in the middle of the two previous budget proposals on many other issues.
In their version of the budget, the Senate Republicans give the retirement systems funding over and above the actuarially required contributions (ARC). The proposal includes $282.4 million for the woefully underfunded KERS, the lowest funded plan in the Kentucky Retirement System, and $913.3 million for the KTRS.
These are the highest levels proposed thus far, as the governor’s recommended funding for the systems were increased for KTRS in the House version of the budget. The Senate has now proposed millions above both other versions of the budget.
Also in the area of pensions, the Senate leaves $250 million set aside in a “permanent” fund for pension funding in the future. This idea was put forth in Gov. Matt Bevin’s budget proposal when he created a $500 million permanent fund which was drained in the proposal from House Democrats.
Rainy Day Fund
Another fund which each plan has looked to add additional funds to is the state’s budget reserve trust fund, also known as the “rainy day” fund. In the Senate proposal, $371.5 million is left in that account—an amount more than the $283 million left in that fund under the House version but less than the $520 million set aside by the governor.
The Senate keeps the budget cuts to the state’s colleges and universities at 4.5% in the first year and 9% the next two years. They also keep in the equity funding for Western Kentucky University and Northern Kentucky University that is meant to put those schools on equal footing with other schools in the state.
This budget proposal also includes a plan for performance-based funding, something called for by the governor but taken out by the House as the governor’s office did not have a fully formed plan for that type of system. The Senate explained their plans for performance-based funding for the state’s higher education institutions Tuesday. Get the details of that plan here.
A proposed bond for $100 million for workforce development proposed by Gov. Bevin has been taken down to $50 million in the Senate budget. That bond was removed in the House budget.
Also on workforce, the Senate removed language from the House version of the budget to authorize funding for a Work Ready scholarship program to provide free tuition to some students attending the state’s community and technical colleges, an initiative proposed by the House Democrats.
Debt Ratio of Budgets
Sen. Chris McDaniel, the chair of the Senate Appropriations and Revenue Committee, explained Wednesday that versions of the budget from the governor, House and Senate each contain a 5.8% debt ratio.
Now that the Senate has passed their budget Wednesday afternoon, the House and Senate will go into a conference committee to hammer out the differences of their proposals and attempt to come to an agreement to send to the Governor.