Beshear’s budget offers pension reprieve for health departments

Before the legislature froze health departments’ pension contributions last year, the Department of Public Health made this map, which is based on 2019 data but still shows their relative financial health.

By Melissa Patrick
Kentucky Health News

As health departments across Kentucky face pension challenges that could force many of them to enforce big cuts in services or even close their doors, Gov. Andy Beshear’s two-year budget proposal offers them a bit of a reprieve.

Beshear’s proposal would give the departments about $16.5 million in each year of the budget as a way to freeze their employer contribution rate at 67.41% of payroll.

Their current rate is 49.47% of payroll, but this is set to jump to 83.43% on July 1, the day the next budget starts. The Democratic governor’s proposal would have to be approved by the Republican-controlled legislature.

Scott Lockard, director of the Kentucky River District Health Department, said his agency, which serves Knott, Lee, Leslie, Owsley, Perry and Wolfe counties, will need this funding to stay open.

“I am very grateful,” Lockard said in an email. “This increase in funding is an acknowledgement of the importance of the critical services we provide. The options provided to KY River District under House Bill 1 of the special session are completely unaffordable for my agency. This increase in state support to cover pension cost increases is the only way will be able to continue to protect and promote the health of the residents of the KY River District.”

During a special session last summer, lawmakers gave health departments, regional universities and quasi-governmental agencies the choice of staying in the Kentucky Retirement System and paying the full obligations or leaving the system, either by paying a lump sum or buying their way out over time. Those that choose to leave would need to move employees to a 401(k)-type plan.

The departments say none of these choices are viable, and none have left KRS. The state Department for Public Health has said that without some relief from their obligations, dozens of health departments are at risk of closing.

To address their financial crisis, the departments want lawmakers to approve a major overhaul of the health-department system, including changes in how they are funded. HB 135, sponsored by Rep. Kim Moser, R-Taylor Mill, has passed the House Health and Family Services Committee. which she chairs, and is in the House Appropriations & Revenue Committee.

“I am appreciative of our governor recognizing the plight of local health departments and I look forward to working with our legislature thorugh the budget process,” said Allison Adams, president of the Kentucky Health Department Association.

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