Interim Joint Committee on State Government


Minutes of the<MeetNo1> 3rd Meeting

of the 2003 Interim


<MeetMDY1> September 23, 2003


The<MeetNo2> third meeting of the Interim Joint Committee on State Government was held on<Day> Tuesday,<MeetMDY2> September 23, 2003, at<MeetTime> 5:00 PM, in<Room> the Activities Center at Natural Bridge State Park. Co-chairs Senator Albert Robinson and Representative Charles Geveden jointly chaired. Senator Robinson called the meeting to order.


Present were:


Members:<Members> Senator Albert Robinson, Co-Chair; Representative Charles Geveden, Co-Chair; Senators Walter Blevins, Charlie Borders, Tom Buford, Julie Denton, Ernie Harris, Alice Kerr, Elizabeth Tori, and Johnny Ray Turner; Representatives John Adams, Adrian Arnold, Eddie Ballard, Carolyn Belcher, James Bruce, Buddy Buckingham, Dwight Butler, Larry Clark, Perry Clark, Tim Couch, Brian Crall, Tim Feeley, Derrick Graham, J. R. Gray, Mike Harmon, Charlie Hoffman, Jimmie Lee, Mary Lou Marzian, Lonnie Napier, Stephen Nunn, Jon David Reinhardt, Tom Riner, and Tommy Thompson.


Guests: Bobby Drake, Powell County Judge/Executive; Lonnie Morris, Powell County School Superintendent; Carol Palmore and Carl Felix, Personnel Cabinet; Bill Hintze, Governor's Office for Policy and Management; Jeb Weese, Park Naturalist; Goble Cantrell, West Liberty, KY; and members of the Interim Joint Committee on Local Government who were present.


LRC Staff: Joyce Crofts, Stewart Willis, Mark Roberts, Jamie Franklin, Mark Mitchell, Joe Pinczewski-Lee, Donna Gaines, Rebecca Mullins, Roger Hogan, L. J. Tyree, and Cheryl Walters.


Senator Robinson thanked the staff of Natural Bridge State Park and welcomed committee members and guests. He also welcomed members of the Interim Joint Committee on Local Government, which would be meeting jointly with the State Government Committee the next day in Irvine, KY. Senator Alice Kerr and Representative Adrian Arnold, Co-chairs of the Elections, Constitutional Amendments & Intergovernmental Affairs Task Force, and Representative Steve Riggs, Co-chair of the Local Government Committee, participated in the opening remarks.


The first guest speaker was Bobby Drake, Powell County Judge/Executive. He thanked the Committee for coming to Powell County and also presented Senator Robinson with an artist's portrait of the old Powell County courthouse, as a token of appreciation. Lonnie Morris, Powell County School Superintendent, thanked the Committee for coming to the area to hear the concerns of the local citizens. He discussed the dilemma that employees in the county faced last year with regard to coverage in the state health insurance group, and he expressed gratitude to Senator Robinson and Representative Arnold—Powell County's representation in the legislature—and Personnel Cabinet Secretary Carol Palmore for their assistance in remedying the situation. In closing, he asked the Committee to do what they can to bring down the cost of health insurance for employees.


(NOTE: Due to technical difficulties with the tape recorder, the audiotape of the remainder of the meeting was inaudible. Minutes reflect the information presented in the materials handed out at the meeting.) Committee members and guests individually introduced themselves, and the secretary noted attendance for the record.


Carol Palmore, Secretary of the Personnel Cabinet, gave a PowerPoint presentation entitled, "Health Insurance Trends and Public Employees." She was assisted by Carl Felix, Executive Director of the Office of Public Employee Health Insurance. (Copies of the presentation are on file with committee staff.)


Topics included in the PowerPoint presentation were: physician and hospital network strength; comparison of the 2003 Commonwealth group with data from the Mercer 2002 national survey; health care flexible spending accounts; Commonwealth group trends; enrollment, by tier, plan/option, carrier, and employee group for 1999-2003; group healthcare costs, by age; and prescription drug utilization in 2000, 2001, and 2002. The presentation was followed by an extended period of discussion, during which Ms. Palmore responded to committee members' questions and concerns.


The next guest speaker was William Hintze, Deputy State Budget Director. Due to time constraints, Mr. Hintze summarized an overview of the budget of the Commonwealth. The full-length overview was presented in five categories: (I) Looking Back – The Past Three Years; (II) FY 2004 – Kentucky Outlook; (III) Looking Ahead – FY 2005 and FY 2006 – Preliminary View; (IV) Structural Budget Analysis – Preliminary Look – "Neither a Best Case Nor a Worst Case Scenario"; and (V) A Word About the Road Fund. (Copies of the overview may be obtained from State Government Committee staff..) The following significant data was included in Mr. Hintze's overview. The total shortfall for FY 2001 was $185.4 million, with no cuts to education. The total shortfall for FY 2002 was $687.1 million, with no education cuts to grades K-12, but a two percent cut in postsecondary education. The current enacted budget (HB 269) protects education, human services, and public safety but includes 2.6 percent cuts to most state agencies in FY 2003. Agency budgets are "flat-lined" for FY 2004. However, the current budget is imbalanced—i.e., it relies on one-time funds and defers expenditures. A total shortfall of $89.9 million is indicated for FY 2003; possible solutions, such as unbudgeted lapsing funds and federal fiscal relief, amount to $113.7 million. The undesignated fund balance for FY 2003 is projected to be $162.5 million. Although there is some "good news" for FY 2004, a revenue shortfall of $274.4 million is projected, as well as growth of the structural imbalance. For FYs 2005 and 2006, a significant structural imbalance in the budget will continue.


The next speaker was Goble Cantrell, a state corrections employee and member of the Fraternal Order of Police. Mr. Cantrell expressed concern about the high cost of health insurance for state employees and spoke in support of implementing a self-funded health insurance program for the Commonwealth.


Due to shortness of time, a scheduled presentation by Jeb Weese, Natural Bridge Park Naturalist, had to be cancelled. Business concluded, and the meeting was adjourned at approximately 7:00 p.m.