Interim Joint Committee on Appropriations and Revenue


Minutes of the<MeetNo1> 3rd Meeting

of the 2011 Interim


<MeetMDY1> August 25, 2011


Call to Order and Roll Call

The<MeetNo2> 3rd meeting of the Interim Joint Committee on Appropriations and Revenue was held on<Day> Thursday,<MeetMDY2> August 25, 2011, at<MeetTime> 1:00 PM, in<Room> Room 154 of the Capitol Annex. Representative Rick Rand, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Bob Leeper, Co-Chair; Representative Rick Rand, Co-Chair; Senators Joe Bowen, Tom Buford, Jared Carpenter, Denise Harper Angel, Ernie Harris, Jimmy Higdon, Paul Hornback, Vernie McGaha, Gerald A. Neal, R.J. Palmer II, Joey Pendleton, Brandon Smith, Jack Westwood, and Mike Wilson; Representatives John A. Arnold Jr., Dwight D. Butler, John "Bam" Carney, Jesse Crenshaw, Ron Crimm, Mike Denham, Bob M. DeWeese, Danny Ford, Derrick Graham, Keith Hall, Jimmie Lee, Reginald Meeks, Lonnie Napier, Fred Nesler, Marie Rader, Jody Richards, Sal Santoro, Arnold Simpson, Jim Stewart III, Tommy Turner, Jim Wayne, and Susan Westrom.


Guests:  Erin Klarer, Vice President of Government Relations; Mel Letteer, Research and Policy Analyst; Becky Gilpatrick, Director of Student Aid; and Shelley Park, legislative liaison for the Kentucky Association of Student Financial Aid Administrators from the Kentucky Higher Education Assistance Authority: Secretary Marcheta Sparrow and Mona Juett, legislative liaison, Tourism, Arts & Heritage Cabinet; and Commissioner Gerry van der Meer, Department of Parks.


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


Senator Leeper moved to approve the minutes from the previous meeting as written. The motion was seconded by Representative DeWeese. The motion carried by voice vote.


Student financial aid in Kentucky

Ms. Erin Klarer, Vice President of Government Relations for the Kentucky Higher Education Assistance Authority, provided general information about the Federal Pell Grant program. It is the single largest source of federal grant aid supporting postsecondary students. The program is designed to make higher education accessible to low income students and is administered by the U.S. Department of Education. It is funded through discretionary and mandatory appropriations, and provided over $34.8 billion to 9.5 million students in 2010 – 2011. Of this total, $486.5 million was disbursed to students in Kentucky.


Ms. Klarer continued, providing details regarding the use of Pell Grants in Kentucky. She stated that 51 percent (133,991) students attending Kentucky postsecondary institutions received grant awards for the 2010 – 2011 school year. The grant money was distributed as follows: 45 percent to 2-year public institutions, 29.5 percent to 4-year public institutions, 14.5 percent to proprietary institutions, and 11 percent to private institutions. Kentucky’s total postsecondary financial aid sources are as follows: 22 percent from Pell Grant funds, 58 percent from other federal sources, 11 percent from institutional sources, and 9 percent from state funds.


Ms. Becky Gilpatrick, Director of Student Aid for the Kentucky Higher Education Assistance Authority, discussed recent federal financial aid legislation, highlighting several pieces of legislation and discussing their effect on federal student financial aid. Next, she discussed Pell Grant eligibility, stating that the applicant must be a U.S citizen or eligible non-citizen, have a high school diploma or equivalency, and meet satisfactory academic progress standards. In addition, the applicant must be enrolled in an undergraduate course of study without having received a prior bachelor’s degree, and must never have been in default on a Title IV loan or liable for an overpayment on a Title IV grant.


Ms. Gilpatrick next discussed the federal needs analysis associated with the Pell Grant program. Expected Family Contribution (EFC) is the standard formula used in determining financial need. Factors used to determine EFC are adjusted gross income, untaxed income, taxes paid, assets, household size, and number in household attending college. The maximum EFC for Pell Grant eligibility is $5,273. Ms. Gilpatrick also discussed the application process for federal financial aid, outlining the Free Application for Federal Student Aid (FAFSA) form, which provides data needed to determine EFC. The FAFSA also serves as the application for other aid programs, including state financial aid. Pell Grant award amounts range from $555 to $5,500 per school year. Award amounts are based on a student’s EFC and enrollment status. When determining the award amount, the lower the EFC, the greater the Pell Grant eligibility. Students making satisfactory academic progress may receive Pell Grant awards for 18 semesters. 


Ms. Gilpatrick discussed funding issues in the Pell Grant program. The present grant budget does not meet current funding needs. This is due to an increase in students enrolling in college who qualify for assistance. Changes in EFC eligibility and the economic downturn have also contributed to underfunding. The current administration plans to change the program to a full entitlement grant program which would rely solely on mandatory federal funding, and not from discretionary funding subject to annual cuts.


Ms. Shelley Park, legislative liaison for the Kentucky Association of Student Financial Aid Administrators, discussed financial aid packaging. She stated that the Pell Grant is considered the foundation of a student’s financial aid package. Other types of aid are added to help cover the student’s total cost of attendance. These include state grants and scholarships, institutional aid, student work programs, and student loans. Kentucky’s three major financial aid programs are the College Access Program Grant (CAP), Kentucky Tuition Grant (KTG), and the Kentucky Educational Excellence Scholarship (KEES). Nearly 100 percent of net lottery proceeds are designated for these programs, minus $3 million for literacy initiatives. CAP and KTG receive 55 percent of net proceeds, and KEES receives 45 percent.


Ms. Park then provided basic information about each Kentucky student aid program. The CAP grant has a maximum award of $1,900 for the 2011 – 2012 academic year, and recipients must be Pell Grant eligible and enrolled in college at least half-time. The program’s objective is to help Kentucky’s financially neediest students attend in-state technical colleges, trade schools, and universities. The CAP grant had total unfunded potential awards of $119.6 million for FY 2011. The KTG has a maximum award of $2,964 for the 2011 – 2012 academic year and the recipient must be enrolled full-time at an accredited independent institution and demonstrate financial need. The program is designed to equalize tuition for needy students attending independent colleges in Kentucky. This program has a total of $19.6 million in unfunded potential awards for FY 2011.


Ms. Park next discussed the KEES financial aid program. This program is designed to reward students for earning good grades in high school. Award amounts are based on the student’s yearly grade point average (GPA) and their highest ACT or SAT score. Students earn awards each year of high school based on their yearly GPA of 2.5 or higher, with awards ranging from $125 to $500 per year. Students who earn at least one GPA award can receive a bonus for scoring at least 15 on the ACT or 710 on the SAT. She next discussed KEES bonus awards, which include achieving qualifying scores on Advanced Placement (AP) or International Baccalaureate (IB) exams. There is no limit to the number of bonus awards a student can receive. She finally outlined other state financial aid programs, which include teacher scholarships, osteopathic medicine scholarships, coal county scholarships for pharmacy students, Kentucky National Guard tuition awards, and KHEAA work-study programs.


In response to a question from Senator McGaha, Ms. Gilpatrick responded that an eligible non-citizen is defined as student who is in the country on a qualifying visa.


In response to a question from Representative Carney, Ms. Park stated that whatever grading scale a school district might be using, that it is converted to a 4.0 scale for KEES qualification. Additional weight is given to AP and IB classes in determining qualification. 


In response to a question from Senator Leeper, Ms. Park stated that there is language allowing KHEAA to reduce KEES student awards if a funding shortage exists. To date, the KEES program has not reduced awards.


In response to a question from Representative Rand, Ms. Gilpatrick stated that students can earn a KEES award beyond the maximum by taking supplemental AP and IB exams. KHEAA is working on projections concerning the supplemental funds, and it is possible that the supplemental awards may require funding beyond what the lottery proceeds provide.


Update regarding the Department of Parks

Secretary Marcheta Sparrow of the Tourism, Arts & Heritage Cabinet, and Commissioner Gerry van der Meer of the Department of Parks provided an update of the state’s park system. Secretary Sparrow discussed the department’s budget, stating that General Fund appropriation decreased by 15.3 percent from FY 2010 to FY 2011. Available funds to the department were down by 10 percent for the same period, and the department was able to decrease expenditures by 9.5 percent. She discussed various ways the department has been able to reduce its 2011 budget, including implementation of operational efficiencies, introduction of a winter schedule, attrition of full time employees, and the shifting of full time staff to a 37.5 hour work week.


Commissioner van der Meer discussed the effect of flooding on the park system. He stated that the estimated lost revenue due to flood and storm damage for FY 2011 was $750,000. Several system golf courses, marinas, and campgrounds have remained closed for extended periods. He discussed plans and expectations for FY 2012. The department intends to continue to implement study recommendations, to introduce new room rates, and to launch a more user friendly website in late September. He briefly discussed the effects of the economic downturn on the travel industry, with consumer spending remaining flat over the last two quarters.


Commissioner van der Meer discussed the implementation of alcoholic beverage sales at state parks. Alcohol is now available at Jenny Wiley, General Butler, Lake Barkley, John James Audubon, and My Old Kentucky Home state parks. All these parks are located in locally voted wet territories and have been properly licensed.


Commissioner van der Meer provided a brief overview of park facilities and then discussed maintenance issues. He stated that while the maintenance budget has declined, the department is nonetheless responsible for maintaining 20 more facilities than in 2000. Park infrastructure has deteriorated at a rate that far exceeds the maintenance budget and the current estimated need exceeds $200 million. He provided examples of critical need capital projects, including Kentucky Dam Village and Rough River water distribution system upgrades, and Lake Cumberland electrical system upgrades. The current maintenance pool fund is $5.25 million.


In response to a question from Representative Rand, Commissioner van der Meer stated that full alcohol sales have not been implemented at General Butler State Park, but hopefully full sales will be completed by mid-September. All alcohol within the park will be confined to the location where the alcohol was purchased. Secretary Sparrow stated that our parks are not competitive with resort parks in other states.


In response to a question from Representative Ford, Commissioner van der Meer stated that each park has an individual budget, and typically General Fund monies are distributed to each park to make up the difference between expenses and incoming park revenues. Secretary Sparrow stated that only 20 of the state parks self generate revenue. Traditionally, the only parks that make a profit are Cumberland Falls, Natural Bridge, Lake Cumberland, Kentucky Dam Village, and Lake Barkley.


In response to a question by Representative Wayne, Commissioner van der Meer stated he would investigate the possibility of the department receiving Kentucky Infrastructure Authority loans to make needed repairs.


In response to a question from Representative Simpson, Secretary Sparrow replied that at least 50 percent of visitors to Kentucky state parks are Kentucky residents. The economic downturn has raised that percentage slightly. She stated that the park system generates approximately two thirds of its own income, with General Fund appropriations accounting for the remaining third. Hotel incomes alone are not enough to cover park operations expenses, and hotel room rates are priced to remain competitive with surrounding facilities. She also stated that very little interest has been shown in privatizing park run hotels. 


Being no further business, the meeting was adjourned at 3:20 p.m.