Interim Joint Committee on Appropriations and Revenue


Minutes of the<MeetNo1> 3rd Meeting

of the 2006 Interim


<MeetMDY1> September 28, 2006


The<MeetNo2> 3rd meeting of the Interim Joint Committee on Appropriations and Revenue was held on<Day> Thursday,<MeetMDY2> September 28, 2006, 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 David E Boswell, Tom Buford, Carroll Gibson, Denise Harper Angel, Ernie Harris, Alice Forgy Kerr, Robert J (Bob) Leeper, Vernie McGaha, R J Palmer II, Robert Stivers II, Gary Tapp, Elizabeth Tori, Johnny Ray Turner, and Jack Westwood; Representatives Royce W Adams, John A Arnold Jr, Joe Barrows, Scott W Brinkman, Dwight D Butler, James R Comer Jr, Jesse Crenshaw, Bob M DeWeese, Jon Draud, Danny R Ford, Joni L Jenkins, Jimmie Lee, Mary Lou Marzian, Fred Nesler, Stephen R Nunn, Don R Pasley, Marie L Rader, Charles L Siler, Arnold Simpson, John Will Stacy, Tommy Turner, Jim Wayne, Robin L Webb, and Rob Wilkey.


Guests:  Secretary Brian Crall and Commissioner Christine Wilcoxson, Personnel Cabinet; Secretary Mark Birdwhistell, Department of Medicaid Services; and Dr. Carl Metz, Goodwill Industries of Kentucky.


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


Representative Pasley moved to approve the minutes from the August meeting as written.  The motion was seconded by Representative Wilkey.  The motion carried by voice vote.


Secretary Brian Crall of the Personnel Cabinet discussed Kentucky's employee health insurance plan.  He briefly discussed the 2007 benefit plan for state employees, stating that the benefits will remain the same as the 2006 plan and a passive open enrollment will be offered.  This means that employees only need to fill out new enrollment form if they are making a change in their plan.  He added that there is a new fourth plan selection for employees, and that the waiver amount will be $175 which is consistent with the parameters in HB 380. The waiver has been changed from a Flexible Spending Account (FSA) to a Health Reimbursement Account (HRA) which allows the funds in the account at the end of the year to roll over to the next.  Those waiving coverage will must actively do so to receive the $2,100 in their HRA account. 


Secretary Crall and Commissioner Wilcoxson then discussed the new Commonwealth Select plan, which provides a health reimbursement account (HRA) funded by the state.  Commissioner Wilcoxson discussed the specifics of the plan, stating that the single individual would receive $1,000 annually in their HRA, which is subject to benefits deductible and co-insurance.  The fourth option is only available to active employees.  HRA dollars can be used for all qualified medical expenses, such as co-payments, coinsurance, deductibles and qualified over the counter products.  Rollover of the HRA dollars is allowable for those who remain enrolled in the Commonwealth Select option. 


Secretary Birdwhistell encouraged all state employees to take advantage of state health benefits, and particularly family coverage.


Representative Moberly asked how much savings were realized from the pilot self insurance programs, and how are the savings being utilized.  Secretary Crall answered that there were $11 million in savings and those funds are being reinvested into the self insurance program to buy down premiums.  Commissioner Wilcoxson stated that the Cabinet will be providing status reports to the General Assembly quarterly, but the data will likely be one month old. 


Representative Webb asked what is the reason for the state insurance premiums being lower than the national average.  Secretary Crall replied that the savings from our plan are being used to buy down the premiums for the plan. 


Senator Boswell asked if any insurance companies have left the state because of the decrease in people in the private insurance market.  Secretary Birdwhistell indicated that no insurance company had left, and some insurance companies have actually started doing business in Kentucky once again in limited areas. 


Senator Buford asked if the state is still experiencing regionalized premium costs.  Secretary Birdwhistell answered that there is some regional variations, but it is not as pronounced as it was under the old regional model.  Having one statewide carrier has helped equalize the premium costs statewide. 


Senator Tapp asked what happens to the HRA money if an employees changes plans or leaves state employment.  Secretary Crall replied that the money is forfeited. 


Representative Draud asked if there will be additional incentive for employees to practice good health habits.  Secretary Birdwhistell answered that there will be additional incentives introduced within the next few months.


Representative Moberly asked for an update regarding Oakwood.  Secretary Birdwhistell replied that the state has contracted with Bluegrass Mental Health and Mental Retardation Board (Bluegrass MHMR) to assume financial and administrative responsibility for the Oakwood facility.  This contract will prevent the facility from losing its federal funding.  The state has submitted a update/transition plan to the federal government to help secure the federal funding.  He briefly provided some details of the plan, including the transition of the state workers at the facility to becoming employees of Bluegrass MHMR. 


Representative Wayne asked if the employees will retain the same due process protections that they have as state employees once they are transitioned into Bluegrass MHMR employees.  Secretary Birdwhistell replied the employees will retain the same levels of protections since Bluegrass MHMR is a quasi-governmental entity.  Representative Wayne and Representative Crenshaw asked for a copy of the employee lay off plan


Secretary Birdwhistell provided the members with a brief update regarding the state Medicaid program.  He stated that the financial results are favorable with the newly implemented programs.


Next, Dr. Carl Metz of Goodwill Industries of Kentucky, Representative Wayne and Representative Siler discussed 07 BR 69 having to do with tax credits for companies that hire the disabled.  Representative Wayne stated that there are about 845,000 disabled Kentuckians, which represents about one quarter of the state's population.  This bill will provide incentives to companies which employee the disabled.  Representative Siler recounted his very positive experiences employing the disabled. 


Dr. Metz discussed the provisions of 07 BR 69, stating that the purpose of the bill is to encourage employment opportunities for disabled Kentuckians.  He explained that the "state use" section of the bill will help state government and community employment services interface, allowing for better opportunities for the disabled community.  The tax credit incentive will encourage the private sector to provide work for disabled citizens. 


Representative Moberly asked if there was a fiscal note on the bill.  Representative Wayne replied that there is and it would have a negative $1.1 million impact.   Representative Wayne explained the tax credit, stating that a company would request workers through an agency, such as Goodwill Industries.  The company would pay the salary to the agency who would then pay the employee.  The company would then receive a tax credit up to $25,000 to be applied to their state taxes. 


Senator Harper Angel asked if the company sets the wage for these jobs.  Representative Wayne replied that the nonprofit agency or work center sets the wage. 


Next, Ms. Shelly Buntain, president of Independent Industries in Louisville and incoming president of the Kentucky Association for Community Employment Services (KACES), discussed the positive impact the tax credit would have on the disabled citizens of the Commonwealth.  She discussed the activities of KACES which include counseling services and work opportunities for the disabled.  She discussed how Independent Industries provides work opportunities for disabled employees.


Mr. David Girdner, Director of Developmental Disabilities for the Pennyroyal Mental Health Mental Retardation Incorporated, discussed the positive aspects of employing the disabled.  He discussed the services offered to the disabled by the Pennyroyal center to help them become actively employed and the benefits to the disabled person who becomes actively employed. 


Mr. Eddie Farris, an employed disabled person, discussed the positive impacts employment has had on his life.


Representative Moberly thanked Ms. Brooke Fulton, the interpreter for the deaf for assisting with this meeting.  He then informed the members that the next meeting would be held in Winchester and that staff will provide the members with further information.


There being no further business, the meeting was adjourned at 2:30 p.m.  A tape of this meeting and all meeting materials are available in the Legislative Research Commission library.