The 4th meeting of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, September 30, 2004, at 11:00 AM, in Room 131 of the Capitol Annex. Representative Harry Moberly, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Richard Sanders Jr, Co-Chair; Representative Harry Moberly, Co-Chair; Senators Brett Guthrie, Ray Jones II, Dan Kelly, Alice Kerr, Robert Leeper (teleconference from Paducah), Gerald Neal, R.J. Palmer II, Joey Pendleton, Larry Saunders, Dan Seum, Robert Stivers, and Jack Westwood; Representatives Royce Adams, Joe Barrows, Scott Brinkman, Dwight Butler, Jim Callahan, Mike Cherry, Larry Clark, Jack Coleman, Jesse Crenshaw, Bob DeWeese, Jon Draud, Danny Ford, Joni Jenkins, Jimmie Lee, Mary Lou Marzian, Thomas McKee, Lonnie Napier, Fred Nesler, Charles Siler, John Will Stacy, Tommy Turner, John Vincent, Jim Wayne, and Robin L. Webb.
Guests: Frances Steenbergen, Ken Hines, Aldena Collins, Lydia Hines, Lynn Bates, and Phil Bennett, Kentucky Education Association; Wayne Young, Kentucky Association of School Administrators; Charles Wells, Kentucky Association of State Employees; Alicia Sells, Kentucky School Board Association; Gary Harbin, Kentucky Retired Teachers Association; Brad Gross and Sandra Bush, Kentucky Teacher's Retirement System; Mayor George Cheatham, City of Greensburg; and Kerri Cope, state employee.
LRC Staff: Pam Thomas, John Scott, and Sheri Mahan.
Representative Moberly welcomed the members and those who would be testifying. He discussed the importance of this pressing issue to educators and state employees and stated that the purpose of the meeting was to take public testimony regarding state employee benefits.
Senator Kelly moved that the minutes from the previous meeting be approved as written. Second by Senator Kerr. Minutes were approved by voice vote.
First, Frances Steenbergen, president of the Kentucky Education Association (KEA), provided testimony regarding the importance of adequate health insurance for school employees throughout the state. She stated that part of the agreement between school employees and their employer, the Commonwealth if Kentucky, is the provision of health insurance, which is earned through the quality services they provide to the people of Kentucky. Ms. Steenbergen discussed the KEA's position regarding the proposed health care benefit plan for 2005. She provided examples of the affects the higher premiums and lower level of benefits would have on the KEA's members. She discussed the negative impact no insurance carrier choice would have on members.
Then Ms. Steenbergen invited three members of the KEA to provide personal narratives regarding the negative effects of the 2005 proposed insurance plan. These members were Ms. Lynn Bates, a school teacher in Carter county; Ms. Aldena Collins, a school technical assistant from Henderson; and Ms. Lydia Hines, a retired school teacher.
Ms. Lydia Hines, a retired school teacher, discussed her personal experiences with the committee. She outlined the hardships she feels retired teachers will endure, caused by the new insurance plan. These include an increased strain on their fix income and decrease in quality of lifestyle. She discussed the affects decreased prescription drug benefits will have on the older retired population.
Next, Ms. Lynn Bates, a teacher, discussed her personal experiences. She is a single mother of three children, and has difficulty raising them on a newer teachers salary. She worked a second job, but was forced to quit because her exhaustion was affecting her teaching. She is considering taking this second job again so that she can qualify for more affordable insurance. She discussed how the present state employee insurance plan will affect her quality of life and the health of her children.
Finally, Ms. Aldena Collins, a school technology assistant, discussed her personal experiences with the committee. She discussed the many health issues that she and her husband suffer from and how the new insurance plan will affect their health and quality of life.
Representative Marzian asked what is the average salary for support personnel and new teachers. Ms. Collins stated that the average salary for support staff is $14,000 per year. Ms. Bates stated that new teachers make $22,000 per year.
Representative Wayne asked if the KEA was consulted by Governor Fletcher when the new benefits package was being designed. Ms. Steenbergen stated the KEA offered assistance, but they were not consulted.
Representative Napier asked if there is a difference in starting salaries depending on where in the state the teacher is hired. Ms. Bates stated that there is a difference in starting salaries, and in some areas a large difference.
Next, Mr. Wayne Young, executive director of the Kentucky Association of School Administrators (KASA) addressed the committee regarding the 2005 insurance benefit package offered by the governor. He discussed the disappointment felt among his members, and the concern school system administrators have regarding how this will affect their teachers and support staff. He stated that school system employees are going to their administrators telling them that they will not be able to afford to continue working for the school system if this insurance plan goes into effect. He discussed the fiscal affects the plan would have on administrators if the sliding premium scale remains in tact. He requested that if relief of some type were to be given to members, that it not be in the form of a salary raise which would be taxed. But, rather, in benefit assistance.
Representative Brinkman provided additional comments regarding the importance of school system support personnel.
Mayor George Cheatham, Mayor of Greensburg, next addressed the committee regarding the insurance benefit issue concerning quasi governmental entities who participate in the state health insurance plan. He discussed the impact that providing employees health insurance has on the city government and on the city employee. He stated that if the current plan goes into effect, that his city employees will be spending about 31% of their take home pay on health insurance. He discussed the decrease in the wellness benefits in the plan. Mayor Cheatham stated that the city of Greensburg's health insurance benefit costs will increase $41,000 just to cover employees. This increase represents 15% of the city's annual budget.
Representative Moberly asked how long the quasi governmental entities are locked into participation in the state group. Mayor Cheatham replied that participants are locked into the state group for three years.
Representative Cherry asked what is the number of quasi governmental employees who participate in the state group and if there is a legal obligation to pay 100% of a single premium for city employees. Mayor Cheatham replied that there is no legal obligation for the city to pay the full cost of the single premium. Mayor Cheatham stated that he did not know the number of quasi governmental entities that participate in the program.
Representative Clark asked that if Greensburg could get out of their three year obligation to use the state plan, what would happen to those employees when they retire. Mayor Cheatham replied that those employees would probably join the state group.
Representative Webb made a request to staff to find out how many quasi governmental entities participate in the state group plan.
Representative Wayne stated that the committee should find out the number of quasi governmental employees as compared to all state employees that participate in the state insurance group plan. Also, what is the percentage of quasi governmental retirees that participate in the plan.
Next, Mr. Charles Wells, executive director of the Kentucky Association of State Employees (KASE), addressed the committee. All KASE members are in the state health care group. He discussed the physical and financial impacts the health insurance plan would have on teachers and state employees, which in turn will affect Kentucky's education system and public services. Kentucky's teachers and state employees pay more for their insurance than in any other state in the country.
Ms. Kerri Cope, a state employee, discussed with the committee the affects the state health plan would have on her quality of life. Ms. Cope discussed her personal history. She is a kidney transplant recipient and is in need of constant health evaluation and monitoring of medications. Ms. Cope discussed the increased cost of her health care and the negative affects on her heath under the 2005 health insurance plan.
Next, Ms. Alicia Sells from the Kentucky School Board Association addressed the committee regarding state employee health insurance plan. Ms. Sells stated that the current insurance proposed could have a dramatic impact on recruitment and retention of qualified teachers and support staff. She stated that many qualified teachers are migrating to the seven surrounding states where salaries and benefits are higher than in Kentucky. The impact that the premiums that the teachers will have to pay under the 2005 plan will put added pressure on qualified employees to leave Kentucky's school system.
Finally, Mr. Gary Harbin, executive secretary of the Kentucky Retired Teacher's Association, discussed their reservations regarding the 2005 state employees heath insurance plan. He stated his members would like to be treated equitably, eliminating the additional expenses over and above what active teachers will pay. Mr. Harbin discussed the medical insurance stabilization fund and the need for additional funds to raise benefits to levels equal to active teachers. He discussed the need for state employee and association involvement during the health insurance formulation process to provide input as to appropriate coverage and benefits, and the possibility of state self insuring.
Senator Seum asked what is the ratio of retired teacher to active teachers. Mr. Harbin stated that currently the ratio is 63% active teachers to 37% retired teachers. There are approximately 12,600 of the active educators eligible to retire at present.
Representative Ford asked how is insurance coverage handled for those retired teacher living out of state. Mr. Harbin stated that there is a retiree reimbursement fund and they are reimbursed for health care costs that they pay out of pocket up to the cost of a single coverage in-state plan. Those retirees are outside the state group health plan.
Senator Sanders asked what type of health insurance benefits other states are offering their retired teachers. Mr. Harbin stated that Ohio provides full health insurance benefits to their retirees, and the other surrounding states offer minimal benefits.
Representative Moberly asked if Mr. Harbin feels that the cost of living increase recommended in the benefit plan should be higher for retirees. Mr. Harbin replied that yes it should be increased because retirees have a lower income to base the increase upon. This would help offset the health benefit cost increases.
Being no further business, the meeting was adjourned at 1:00 p.m.
A tape of this meeting and all meeting materials are available in the Legislative Research Commission library.