Interim Joint Committee on Appropriations and Revenue


Minutes of the<MeetNo1> 6th Meeting

of the 2007 Interim


<MeetMDY1> December 10, 2007


The<MeetNo2> 6th meeting of the Interim Joint Committee on Appropriations and Revenue was held on<Day> Monday,<MeetMDY2> December 10, 2007, at<MeetTime> 1:00 PM, in<Room> Room 154 of the Capitol Annex. Representative Harry Moberly Jr, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Charlie Borders, Co-Chair; Representative Harry Moberly Jr, Co-Chair; Senators Carroll Gibson, Denise Harper Angel, Bob Leeper, Vernie McGaha, R. J. Palmer II, Tim Shaughnessy, Robert Stivers II, Gary Tapp, Johnny Ray Turner, and Jack Westwood; Representatives Royce W. Adams, John A. Arnold Jr, Scott W. Brinkman, Dwight D. Butler, Larry Clark, James R. Comer Jr, Jesse Crenshaw, Bob M DeWeese, Derrick Graham, Jimmie Lee, Mary Lou Marzian, Lonnie Napier, Fred Nesler, Don Pasley, Marie Rader, Charles Siler, Arnold Simpson, John Will Stacy, Tommy Turner, Jim Wayne, and Robin L. Webb.


Guests:  Dr. Lawrence Lynch, Chair of the Consensus Forecasting Group; Mark Shriver, Vice President, Save the Children Federation, Inc.; Douglas Adams, Superintendent, Clay County Schools; Edward Cunningham and Jim Ackinson, Kentucky Higher Education Assistance Authority.


LRC Staff:  Pam Thomas, Jennifer Hays, Charlotte Quarles, John Scott, and Sheri Mahan.


Representative Pasley moved that the minutes from the previous meeting be approved as written.  The motion was seconded by Senator Stivers.  The motion carried by voice vote. 


First, Mr. Mark Shriver, president of the Save the Children Federation, and Mr. Douglas Adams, Superintendent of the Clay County schools discussed various programs available for children in eastern Kentucky.  Mr. Shriver introduced himself and provided a brief overview of the programs implemented by Save the Children in rural Kentucky.  He discussed the critical needs which these programs try to address, and highlighted the locations of various program sites.  Mr. Shriver then described in more detail the programs offered, of which is offered after school and typically consists of a literacy program run in conjunction with a physical fitness program.  The children participate in both activities during the course of a regular day in the program.  There are also programs offered during the school day, which are funded by Save the Children, where tutors identify and work one on one with children who need additional reading assistance. 


Mr. Shriver then discussed the increase in reading proficiency for sites with literacy programs.  He stated that overall, the change in percentage of children reading at or above grade level increased from 27% to 36%, which represents a 33% increase in reading skills. Reading frequency and reading comprehension also increased for children participating in these literacy programs.  He also briefly discussed the healthy lifestyles for obesity prevention program and highlighted a chart detailing the Save the Children literacy programs grants for each school participating in the program.


Next, Superintendent Davis discussed the Save the Children literacy program in Clay County schools and the impact the program has had on the county's test scores.  He discussed the demographics of Clay county and his tenure as superintendent.  He stated that there are four Save the Children programs in the county and discussed the services available at these sites.  He provided further detail of the literacy program and provided examples of improvement in test scores at these schools.


Chairman Moberly asked what portion of the money spent in Kentucky schools comes from private donations.  Mr. Shriver replied that Save the Children spends almost $5 million each year in Kentucky, with $4 million coming from private funding and $1 million from the General Fund. 


Representative Arnold asked if all the Save the Children programs are located in eastern Kentucky.  Mr. Shriver answered that yes, currently they are all located in eastern Kentucky, but they are interested in starting programs state-wide.


Chairman Borders discussed the importance or literacy in the future academic success of Kentucky's children. 


Senator Stivers discussed the effects and the importance of the Save the Children programs in Clay County.


Representative Marzian asked how children are selected to participate in the programs and whether parents are encouraged to participate in the programs.  Superintendent Davis replied that with the early intervention programs, parents are taught parenting skills and informed about resources for their children.  Mr. Shriver said that children are identified by the schools and referred to the program. 


Next, Representative Wayne and Representative Siler discussed the possible establishment of a problem gaming fund as described in 08 BR 917.  Representative Wayne provided statistics regarding the numbers of compulsive and problem gamblers in the state.  He provided highlights of the provisions of the proposed bill.  Representative Siler then commented on the bill.   


Representative Clark commented on the proposal and suggested utilizing Gambler's Anonymous to assist in providing counseling.


Representative Webb asked if the oversight board will make all decisions regarding distribution of funding.  Representative Wayne replied the board would make the funding decisions.


Next, Dr. Lawrence Lynch, chair of the Consensus Forecasting Group, discussed the state revenue outlook for the next biennium.   He briefly discussed the projected US gross domestic product and average personal income for fiscal years 2008 through 2010.  He then discussed Kentucky's projected personal income growth, which averages around 5% for the biennium.  Dr. Lynch provided the General Fund estimates for the biennium, stating that the projection for FY 08 is $8,666.4 million, FY 09 is $8,877.6 million and FY 10 is $9,200.5 million.  A large part of this increase is due to a rise in sales and use tax and individual income tax revenues.  Dr. Lynch then discussed the Road Fund estimates. The estimate for FY 08 is $1,285.2 million, for FY 09 is $1,345.7 million, and for FY 10 $1,422.3 million. 


Chairman Moberly asked where the economy is based on the national model.  Dr. Lynch responded that the economy is slowing but it is not believed the economy will go into a recession.


Representative Pasley asked what the employment trend is for Kentucky.  Dr. Lynch replied the trend has been declining. 


Representative Nesler asked what are going to be Kentucky's major economic strengths over the next few months.  Dr. Lynch responded that exports and tourism will be strong. 


Finally, Mr. Edward Cunningham and Mr. Jim Ackinson of the Kentucky Higher Education Assistance Authority (KHEAA) and the Kentucky Higher Education Student Loan Corporation (KHESLC) discussed student loans and loan forgiveness.  Mr. Cunningham briefly discussed some of the recent difficulties regarding student loans.  He gave a brief overview of the mission and the responsibilities of KHEAA.  He discussed the funding mechanism of the state student aid programs and services and how these revenues are used by KHEAA.  He discussed the various services and benefits offered to students by KHEAA. 


Mr. Cunningham discussed the current financial situation of KHEAA/KHESLC and the impact that federal cuts are having on their services.   He discussed the loss of 9.5% base income and the College Cost Reduction and Access Act.  He mentioned other significant financial events which have impacted KHEAA, including the transfer to the General Fund of $66.8 million in FY05 and FY06, and mandated funding of the Kentucky National Guard Tuition Award and the Work-Study Program, and the current credit difficulties.


Mr. Ackinson then discussed the future of borrower benefits, stating changes were made by the Board of Directors in November.  These include the elimination of specialty benefits for new loans disbursed after June 30, 2008, maintaining non-specialty benefits as financially feasible, and the elimination of borrower benefits on out-of-state, non-Kentucky nexus loan except where sustainable profits are identified. He discussed the biennial budget needs for KHEAA, and stated that the budget request for the biennium will be $71.8 million.   Mr. Ackinson discussed potential relief measures for KHEAA, which include raising the bond cap and lengthening bond maturity for KHESLC.


Representative Moberly asked if the new federal law will prevent KHEAA from have adequate money to continue the loan forgiveness programs.  Mr. Cunningham replied yes, that under the new law benefits provided for specific occupations would be eliminated.  The law provides that states can continue to provide this benefit, but they could not be marketed and the state would need to provide the funds for the program.  Mr. Cunningham indicated that the loan forgiveness programs provided for in the energy bill could not be funded unless the legislature directly provides the funding.


Representative Webb asked if there will be any litigation regarding the funding of loan forgiveness for specialties as provided for by state legislatures.  Mr. Cunningham replied that currently there are no challenges to this ruling.


Chairman Moberly expressed his gratitude for the hard work and dedication of the committee members during the interim.  There being no further business, the meeting adjourned at 3:16 p.m.  A tape of the committee meeting, along with all meeting materials, is available in the Legislative Research Commission library.