Call to Order and Roll Call
The 2nd meeting of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, July 24, 2014, at 1:00 PM, in Room 154 of the Capitol Annex. Senator Bob Leeper, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Bob Leeper, Co-Chair; Representative Rick Rand, Co-Chair; Senators Walter Blevins Jr., Tom Buford, David P. Givens, Sara Beth Gregory, Denise Harper Angel, Ernie Harris, Alice Forgy Kerr, Christian McDaniel, and Gerald A. Neal; Representatives Johnny Bell, Dwight D. Butler, John Carney, Leslie Combs, Jesse Crenshaw, Ron Crimm, Mike Denham, Bob M. DeWeese, Myron Dossett, Jim Glenn, Martha Jane King, Jimmie Lee, Marie Rader, Jody Richards, Sal Santoro, Arnold Simpson, Rita Smart, John Will Stacy, Tommy Turner, David Watkins, Addia Wuchner, and Jill York.
Guests: Elaine Walker, Commissioner, Department of Parks; Rob Richards, Chief Financial Officer, Department of Parks; Monica Conrad, Director of Resorts and Facilities Management, Department of Parks; and Lawrence Kissner, Commissioner, and Lisa Lee, Deputy Commissioner, Department for Medicaid Services.
LRC Staff: John Scott, Charlotte Quarles, Eric Kennedy, Jennifer Hays, and Sheri Mahan.
Representative Denham moved to approve the minutes of the previous meeting as written. The motion was seconded by Senator Givens and carried by voice vote.
Update and Outlook for Kentucky State Parks
Elaine Walker, Commissioner; Rob Richards, Chief Financial Officer; and Monica Conrad, Director of Resorts and Facilities Management, of the Department of Parks gave an overview of revenues generated by the state park system in past fiscal years and discussed revenue projections for fiscal year 2015. The system achieved cost savings by reducing energy consumption and reducing personnel costs during the off season months. Personnel costs will increase during FY 2015, with parks employees seeing either a 3 percent or 5 percent salary increase as enacted in the 2014 – 2016 biennial budget.
Commissioner Walker discussed various partnerships being implemented by the department. These include a partnership with the Department of Fish and Wildlife Resources for wounded warrior hunts and utilizing a black bear expert in eastern Kentucky parks. The department partnered with the Division of Forestry for an ash tree harvest at General Butler State Park. Buckhorn Lake marina and eight other state marina have been leased to private companies. She discussed revitalization efforts at several state golf courses and the installation of a 3D archery range at Kenlake State Park.
Commissioner Walker discussed the importance of marketing in the continued success of Kentucky’s state parks. She discussed the technological difficulties the parks face and how outdated technology used by the parks does not allow online hotel and resort reservation websites, such as Expedia, to make reservations. Updating the department’s computing technology is expected to increase park revenues by $1 million annually.
The commissioner discussed the 2014 extreme winter conditions and their effects on the parks. Most of the cost from winter storm damage was covered by insurance, but there are several parks that will incur repair costs.
Commissioner Walker discussed actual park revenue. In FY 2014, the park system took in $47.5 million, which was down $1.23 million from FY 2013. The projected revenues for FY 2015 total $48.5 million. Projected increases are due to infrastructure improvements, resort room improvements, and technology improvements, which were included in the enacted budget.
In response to questions from Representative Richards, Commissioner Walker stated that two state golf courses break even, and the rest operate at a deficit. She said that for every $.70 of state revenues the state park system generated an additional $1.00.
In response to a question from Senator Buford, Commissioner Walker said it would cost approximately $1.5 million to update the state parks IT system. Upgrading property management technology will allow the state park system to interface with websites such as Expedia to book visitors. Interface with these types of websites is not possible without system upgrades.
In response to questions from Representative Turner, Commissioner Walker stated the park system is investigating utilizing public/private partnerships to increase revenues and improve guest experiences. The state cannot afford to build a lodge at General Burnside State Park, but a private entity is interested in building a 50 room lodge. The private entity would build and maintain the property and provide a percentage of the lodge’s profits to the park. The entity is also interested in assuming management of General Burnside’s golf course. The department views the proposed public/private partnership at General Burnside as a pilot project. Depending on results of this partnership, the department may consider similar partnerships at other state parks. General Burnside was chosen because the local community supports the project and is offering to provide economic incentives to assist it. Representative Turner stated that he had not been included in any community discussions regarding this project and requested to be included in future discussions. He also discussed the importance in protecting state employees’ jobs.
In response to a question from Senator McDaniel, Commissioner Walker stated that the local community supports the Perryville Battlefield State Park becoming part of the national park system, but the department is not actively pursuing this transfer.
Representative Rand discussed the importance of the state park system to Kentucky tourism and the need for increased state investment in the system.
Update on Medicaid Expansion
Lawrence Kissner, Commissioner, and Lisa Lee, Deputy Commissioner of the Department for Medicaid Services testified about the Medicaid expansion under the Affordable Care Act (ACA). The department’s strategy is to provide better care for individuals, improve the health of Kentucky’s general population, and improve financial stewardship of Medicaid funds. Medicaid is the largest payer of healthcare services for Kentucky residents, with one of every four Kentuckians being Medicaid eligible. Commissioner Kissner outlined the ten essential health benefits required by the ACA and stated that coverage for these services went into effect on January 1, 2014. Since August 2013, the department has filed and approved 27 state plan amendments, with 6 amendments pending federal approval. The department has also filed 48 regulations to implement ACA requirement.
Commissioner Kissner continued, stating that enrollment numbers in Medicaid have remained fairly constant, but the makeup of those enrolled is constantly changing. The percentage of the state population under 65 that is uninsured has decreased since the implementation of ACA, with the greatest increase in eastern Kentucky. He discussed improvements in preventive health care, stating that annual dental visits have increased by 15.8 percent, adult preventative services have increased by 36.7 percent, breast cancer screenings have increased by 20.6 percent, and colorectal cancer screenings have increased by 16.1 percent. He outlined increases in new providers added to the Medicaid system, and discussed the average MCO application processing time.
Commissioner Kissner discussed the 2015 Medicaid budget, outlining the appropriation amounts for each agency in the department. The budget for FY 2015 was reduced by 5 percent, which is a $33.4 million reduction. He discussed additional ACA data, including 46 percent reimbursement growth for urban hospitals and 36 percent growth for rural hospitals. He stated that 78 percent of hospitals should have increased revenues, and will still receive disproportionate share (DSH) payments if they qualify.
In response to a question from Representative Wuchner, Commissioner Kissner stated that the economic evaluation of the ACA by the University of Louisville shows that there is an expected increase of 17,000 new jobs in Kentucky. Representative Wuchner stated her concerns regarding the reduction in health care related jobs in her district since enactment of the ACA.
In response to questions from Senator Givens, Commissioner Kissner said that the Kentucky Kynect portal verifies enrollee information with the federal database. If there are discrepancies, the enrollee must apply in person at a local office. Biennial budget decisions will be made by the General Assembly. Financial stewardship should be judged by improved health outcomes. If a state population’s health improves, citizens spend more time at work and utilize the health care system less, thus decreasing overall healthcare costs.
Chairman Leeper requested that staff draft a letter requesting the department to provide the committee with anticipated funding levels needed for the next biennium.
In response to questions from Representative Stacy, Commissioner Kissner stated there are many factors that affect hospital profits, and Medicaid receipts are just one factor. He discussed the complexity of the medical services industry and managed care organizations.
There being no further business, the meeting was adjourned at 2:45 p.m.