House Advances Amended Two-Year Budget Plan

The Kentucky House of Representatives approved an amended version of House Bill 500 on Thursday, advancing a $31.56 billion two-year state budget following several weeks of review in budget subcommittees. It now moves to the Senate for consideration.

The two-year spending plan includes a 3% reduction in executive branch spending in each year of the budget while increasing funding in areas such as public education, state employee health coverage, Medicaid, and public safety.

The bill was introduced in late January as a preliminary framework and was revised through the committee process before final House passage. The updated version includes changes to public education funding, state employee health coverage, and other areas compared to the version originally filed.

The proposal also directs approximately $614 million to the state’s Budget Reserve Trust Fund, bringing the reserve balance to more than $3.5 billion.

Education

The House-passed version provides approximately $369 million more for K-12 public education over the next two years.

The amended version includes a 2% increase each year in base funding through the Support Education Excellence in Kentucky (SEEK) formula. Per-student SEEK funding would rise from $4,586 to $4,626 in the first year and to $4,792 in the second year of the budget.

Transportation funding for school districts would remain at $398 million per year and is not reduced.

In addition to the SEEK increase, the budget provides funding to cover pension and health insurance costs for school districts. That includes $61.5 million and $73.4 million over the two years for teacher retirement obligations, $128.3 million and $211.9 million to maintain required pension funding levels, and $201 million in the second year to fully fund health insurance costs for local school district employees.

At the postsecondary level, the proposal supports university facility maintenance and maintains performance-based funding for public institutions through the state’s higher education formula.

Public Employees and Health Plan

House Bill 500 funds the Kentucky Employee Health Plan at the actuarially determined amount, which includes a 14% increase in state contributions in the first year and an additional 10% increase in the second year of the budget as health insurance plan costs continue to rise. The amended version also removes language that would have capped employer contributions.

The budget also includes a 2% salary increase in each year for state employees and funds public pension systems at the required contribution levels, including $78.5 million in the first year directed toward the Kentucky Employees Retirement System.

Medicaid

The House proposal includes $2.993 billion in state General Fund support for Medicaid in the first year and $2.997 billion in the second year — nearly $6 billion over the two-year budget period. Medicaid funding is higher than in prior budget cycles as health care costs rise and federal funding has shifted.

The budget expands home- and community-based waiver programs by adding 450 new slots over two years and maintains funding for Certified Community Behavioral Health Clinics. The proposal also includes additional reporting requirements related to hospital payments and prescription drug spending within the Medicaid program.

Public Health

House Bill 500 includes $212.9 million per year in federal funding for the Rural Health Transformation Program, which provides funding to support health care services in rural areas of the state.

It also increases restricted funding to support operations within the Office of Vital Statistics, mandated medical marijuana testing, and participation growth in the Ryan White Program. The proposal authorizes $270 million in bond funding to expand the state’s Central Laboratory.

Public Safety and Corrections

The proposal includes funding to support salary adjustments for state troopers and commercial vehicle enforcement officers.

The budget also increases support for juvenile justice facilities in Jefferson County and provides additional resources for law enforcement training, equipment updates, the Body Armor Grant Program, and technology improvements, including a new computer forensics laboratory in Western Kentucky.

Adult correctional institutions receive additional funding to address medical cost increases, along with authorized capital and maintenance projects across public safety and correctional facilities.

Tourism, Arts, and Heritage

The budget includes funding and capital authorizations across tourism, parks, arts, and heritage programs, including support for the Kentucky Mountain Regional Recreation Authority, facility expansion and maintenance at the Kentucky Exposition Center, and improvement projects at Kentucky State Parks, the Kentucky Horse Park, and other state facilities. The proposal also authorizes capital investments in fish and wildlife infrastructure and historic preservation projects.