BR Sub on Education

The Budget Review Subcommittee on Education met in Frankfort and heard testimony on Career & Technical Education (CTE) efforts across the Education Cabinet, KDE, CPE & KCTCS. My notes are below along with links to the slides.

Education Cabinet

Secretary Ramsey, Deputy Secretary Nemes, and Commissioner Gordon updated the committee on key initiatives. Their slides are available HERE. 
- 4200 students have received $6.8 million in Work Ready Scholarship
- Dual Credit Scholarship - The data was from 2015-16, so not very helpful on recent trends, but about $15 million has been spent on the program. 
- Work Ready Skills $100 million bond fund - Monies have been spent, now in monitoring phase - $220 million total ($98 million state dollars and $121 million in matching funds locally) - Expected to increase training capacity for more than 20,000 employees
- Apprenticeships - $1.5 million in federal funds to expand apprenticeships, 251 programs serving 3,391 apprentices
- KY TECH (Get from slides)
- KY Career Center (Get from slides)
- KYStats Funding - Decreasing by 45% in December 2019. Funded mostly by grants $5.9 of 6.8 million. 

KDE
Commissioner Lewis and Associate Commissioner David Horseman gave an overview of KDE initiatives and budget priorities related to CTE. Slides are available HERE and my notes are below:
- Gave an overview of New Skills for Youth as it is an attempt to encourage districts to share resources. Regional partnerships are critical particularly in CTE, because resources are scarce and employers recruit larger areas than one school district 
- Employer engagement Strategies were discussed, but no mention of the work on essential skills except that they were soliciting the skills from the Workforce Investment Boards.
- 20 career pathways that contain general ed as well as technical training, most are grades 9-14 and some are 9-16
- CTE Task Force - Concerns raised by KDE
1. State vs Local centers creates issues on funding and governance
2. Lack of Funding for High Demand CTE programs
3. Funding formula for Local Centers - Statutory funding formula not used

Commissioner Lewis spoke about significant funding need in CTE. Gave an example of Ohio CTE, half the number of technical high schools, but double the students and much better quality. Seems to be saying that we need fewer technical schools and better collaboration between state and local districts

Sen. Wilson in remarks seems to be saying that the CTE Task Force work will be to unify system, fund the system, and deal with qualified teachers of CTE courses. I would expect this will be a big issue next session 

CPE & KCTCS
CPE President Thompson & KCTCS President Jay Box spoke on how to improve CTE in postsecondary education. 

Thompson shared the following key points in his opening remarks:
-  CPE is asking the question...is the credential we are offering producing value for student and needed by business
- Trying to build employability skills into fabric of programs
- Need to consider rebranding work ready scholarship to the "free college" program that it is
- Need to build capacity with underserved students
- Need to invest in higher ed, but need to do it strategically and in results 

President Box utilized these slides and made the following key points:

- He opened giving examples of several ways KCTCS has been partnering with the business community, specifically the KY Association of Manufacturers with KY FAME and their Go Pro in Manufacturing Signing Day.

- Have changed their program mix to be more focused on students getting certificates and not necessarily transferring to 4 year institutions. From 55% to 45% in terns of transfer students and 45%-55% for students not transferring and going direct to the workforce. Sees that trend continuing.

- KCTCS advocated for fully funding the performance funding formula and to increase dual credit rate reimbursement for KCTCS.

July IJC on A&R

The Interim Appropriations & Revenue Committee met yesterday in Frankfort and took testimony on the SEEK formula, KRS actuarial assumptions, and Tobacco Settlement dollars. My notes and relevant presentations are below.

SEEK Presentation
Robin Kinney and Chay Ritter from KDE gave a very factual presentation on how the SEEK formula works and how local districts can equalize funding. The presentation is encapsulated on these slides. There was no specific ask from KDE and this was very much an informational presentation.

There were several legislative questions, but most were directed at technical formula items and not necessarily policy items around SEEK.

KRS Actuarial Assumptions
KRS Executive Director David Eager provided an overview of current and revised actuarial assumptions for the public employee pension system.
Slides are available HERE. Two key takeaways are:
1. New actuarial assumptions in the KRS system related to mortality, retirement age, etc will add significant cost to the state budget as well as local government budgets over the next 20 years.
2. The KRS is in a positive cash flow situation (taking in more revenue than paying out benefits) for the first time in several years, which Mr. Eager said is a good indicator of the near term health of the fund.

Lots of legislative questions ranging from questions on quasi-pension bill and impact to the state and the KRS to questions on financial health of KRS and need for broader pension reform. On the new assumptions, legislators were sensitive as to how the state and local governments would be able to afford these changes.

Tobacco Settlement Funds
The committee received an informational overview on the Tobacco Settlement Funds provided by Perry Nutt, LRC Economist. The slides are available HERE and in particular went through past history of the MSA Fund and how those funds were appropriated in the current biennium.
- Legislators questions and comments were focused on positive impact of settlement dollars.
- There was no indication of any downturn in the funds over the near term.

July Medicaid Oversight and Advisory Committee

The Medicaid Oversight and Advisory Committee met in Frankfort for the first working meeting of the Interim. Senator Meredith chaired the meeting and the agenda included an update on pharmacy reimbursement issues and a presentation by Department for Medicaid Services (DMS) on SB 5 implementation and new MCO contracts. Here are the takeaways:

Throughout her comments, Commissioner Steckel focused on the positive steps that DMS has taken to work with independent pharmacies. She said that the Department has a “new found spine” and will not let the MCOs and PBMs “run us over”.  Steckel referred to “predators” during parts of her testimony, referring to PBMs and on several occasions stressed that she does indeed have authority over the MCO subcontractors, a different position from her predecessor.

Additionally, Steckel shared that DMS’s next priority is to begin looking into acquisition costs balanced with dispensing fees.

See the summary below by issue:

Carve-out – It’s still a topic of discussion among legislators. There were several comments that there’s still time to consider ahead of the new contract start date of July 1, 2020. DMS does not intend to weigh in on this issue.  They are working on a study similar to West Virginia to determine if savings would be realized if pharmacy is managed by the state. Myers and Stauffer and the DMS FFS PBM, Magellan, are working together to assist with the study. It will be complete by early fall at the latest. According to the Commissioner, it will be objective and DMS will “stand down” on this issue.

If DMS authority is not sufficient under SB 5, the pharmacists suggested that DMS could directly administer the pharmacy benefits and/or comprehensive PBM reforms.

Fees – There was lengthy discussion on post adjudication fees – DIR, GER, etc. The new MCO contracts will prohibit these fees but we should anticipate legislation to the do the same. The pharmacists told members that since 2013 these fees have increased 45,000 percent. They are being described as a money grab by the PBMs and it’s clear that some sort of education effort is needed to properly explain the processes and reasoning behind each fee.

Contracts – There was a fair amount of discussion by both DMS and pharmacists about PBM requirements related to national contracting and the mandatory participation in Medicaid networks. Both pharmacists and DMS want to prohibit this practice

Specialty Drugs – The pharmacists made claims that in OH, CVS dramatically increased reimbursement for specialty drugs because they benefit through the ownership and mandated use of their specialty pharmacy. Mail order was also mentioned.  Both are issues that have been discussed for years.

MLR – DMS intends to recoup back to 2016 pharmacy funds that were not included as part of claims for purposes of the MLR.

SB 5 MAC rate approvals – Jessin Joseph walked through the process that DMS is working through to monitor and approve rate changes per SB 5. He commented that the intent is to move back to an aggregate approval process in the future.

Other – DMS stated they are looking to move to a preferred drug list to streamline formularies among the MCOs.

A few positives from the meeting:

The pharmacists acknowledged that through working with DMS on SB 5 implementation, reimbursement issues are being addressed.

They acknowledged the positive steps the General Assembly took with the increase in dispensing fees and seemed pleased with the contract requirements included in the RFP for the new MCO contracts to begin on July1, 2020.

The pharmacists shared that in 2017, 9 independents closed, but in 2018 there were 26 new independent pharmacies that opened and 13 more in 2019. This contradicts  previous statements that low reimbursements are continuing to drive independents out of business.

Meeting materials can be accessed HERE

Happy Independence Day!

Happy 4th of July from Government Strategies!

June Interim Update

The 2019 Interim session got underway last week in Frankfort. Legislative leaders adopted a new approach to the interim committee meeting schedule, choosing to schedule all interim meetings during the same week of each month. Previously, committees met throughout the month. We've already noticed – and you'll see from this summary - that this change in schedule provides more of a "session feel" during the week that the committees meet. You can access the new interim committee schedule HERE.  

Political Highlights

Special session chatter escalated as Governor Bevin issued a letter to all members of the General Assembly outlining his administration's concessions to a proposed bill intended to provide relief to quasi-governmental entities for increased pension costs. House Speaker David Osborne, however, issued a response that he doesn't believe that the primary concerns have been addressed and indicated that a special session may not happen before the new fiscal year begins July 1. Earlier in the week, Senator Damon Thayer made similar comments.

June Interim Committee Summaries

We want to provide the most useful information and have worked to include more detail for those committees that are of particular interest to our clients. We look forward to your feedback and are happy to customize based on your needs! Please see the following summaries for each of the committees that met. Don't hesitate to let us know if you have questions or would like additional information on topics discussed.

Medicaid Oversight and Advisory Council

The Medicaid Oversight Committee met briefly, to nominate and elect the new chairs for the upcoming year. Senate members elected Sen. Stephen Meredith as the Senate co-chair and House members elected Rep. Daniel Elliot as the House co-chair. Rep. Elliott is an attorney in Danville and Sen. Meredith is a retired hospital executive from Leitchfield. The next meeting will be held on July 8th and it is expected that the committee will hear updates from the Cabinet for Health and Family Services on new MCO contracts and an update on SB 5 implementation.

Health and Welfare

The IJC on Health and Welfare met last Monday afternoon and with a full agenda. You can access the agenda and all meeting materials HERE.  CHFS Deputy Secretary Putnam shared that the Cabinet is in the process of seeking an amendment to the Medicaid state plan that will allow for payment of qualifying physical and mental health services in schools.  The committee also heard updates on several programs established through grant awards. Additionally representatives from the Lexington Policy and Fire departments presented on the benefits of crisis intervention teams and their community paramedicine unit. The Office of Homelessness Prevention and Intervention presented alongside the Executive Director of the Homelessness and Housing Coalition of KY to discuss the impact of mental health on homelessness and efforts that are underway to address these growing problems across the Commonwealth. The meeting materials contain information on other items discussed during this interim committee meeting.

For a full meeting summary click HERE.

Transportation

The IJC on Transportation met and heard presentations from Transportation Cabinet officials.

Secretary Thomas provided an update on design build projects and focused on a grouping of four major projects on the interstate system through Jefferson County.  The four projects are 1) Widening of I-71; 2) Widening of I-265; 3)  I-71, I-265 Interchange; 4) I-64, I 265.  

The four projects together are being grouped under a design build approach that was authorized under legislation in 2018.  Collectively this is a $188 million project with a compressed project schedule that will complete in fall of 2023. Secretary Thomas' presentation is available HERE.

Appropriations and Revenue

On Tuesday, many of the Budget Review Subcommittees met, as well as the full IJC on Appropriations and Revenue.  A listing of the BR Subs and short summaries are as follows:

BR Subcommittee on Justice – Discussion on Implementation of SB 120

BR Subcommittee on Justice met and heard testimony on the implementation of SB 120. Presenting were Justice Cabinet Secretary John Tilley and various cabinet officials. The presenters touched on a number of pertinent topics from jail funding, re-entry programs, prison enhancement programs, and county jails.  

For a full meeting summary click HERE.

BR Subcommittee on Economic Development, Tourism, and Environmental Protection

The Subcommittee heard presentations from the Tourism Arts and Heritage Cabinet  (TAH) and the Public Protection Cabinet (PPC). Presentations can be accessed HERE

Speaking for TAH was Cabinet Secretary Don Parkinson, Deputy Secretary Regina Stivers, and Finance Director Chris Reece.  These officials gave an overview of the agencies included in the Cabinet and budget updates for the various agencies. The Presentation concluded with Secretary Parkinson discussing priorities for the next budget cycle, while recognizing that the Cabinet is very early in the budgeting process.

Presenting for PPC were Secretary Gail Russell, ABC Commissioner Carol Beth Martin, and Director Matthew Thacker with the Office of Administrative Services. Following an overview of agencies within the Cabinet, the presenters shared that the Budget priorities for the next budget session including for its agencies, like: Charitable Gaming, Department of Insurance and Department of Financial Institutions.

For a full summary click HERE.

Budget Review Subcommittee on General Government

The only agenda item for this subcommittee was a presentation by Chuck Grindle, the Chief Information Officer at the Commonwealth Office of Technology. He provided a budget overview for COT. The presentation is available HERE

Budget Review Subcommittee on Human Services

This month's meeting focused on the Department for Community Based services with an overview of funding for child welfare services by Commissioner Clark. Subcommittee members also heard from officials with the Family Resource and Youth Service Centers with an overview of funding. Presentations on both topics can be accessed HERE.

Budget Review Subcommittee on Transportation

Transportation Cabinet officials provided subcommittee members with two updates. The first was an update on two grant programs –BUILD and INFRA – and projects that have been identified to be funded through each program. Additionally, State Highway Engineer Andy Barber and Project Manager Royce Meredith updated the committee on the Bridging KY Program.

Bridging Kentucky is a statewide program designed to restore, rehab, repair, or replace deficient state, county, and local bridges. Goals include restoring structures to appropriate capacities, focus on safety and soundness, and deliver all bridges for construction by 2024. The cost is roughly 700M, restoring 1000 bridges over a 6-year period. More detail is provided on this topic and the grant programs mentioned above HERE

Appropriations and Revenue Committee

The Presidents of Kentucky's two research universities, the University of Kentucky and University of Louisville presented to the IJC on A&R. President Eli Capiluto discussed UK's research projects on dementia and opioid abuse and also touched on budget requests for the next budget session. President Neeli Bendaupudi made her inaugural appearance before the committee and presented on UofL's research efforts as well as budget requests. Performance funding was a topic that both addressed and while they voiced support for this relatively new way to fund postsecondary institutions there was also recognition that more dollars are needed in the system.

Representatives, including Senator Givens brother, from Auburn University presented on the long-standing partnership with the Commonwealth to provide in-state tuition to students attending Auburn's veterinary school. A shortage of funds from the state to Auburn to cover the cost of Kentucky student "slots" was the theme of the presentation and a soft ask by Auburn for Kentucky to budget for the full cost of the slots in this next budget cycle.

All presentations can be found HERE

Education

The Interim Joint Education committee met and heard testimony on early childhood education and homeschooling. There was also opposition testimony to the social studies standards reg from Dick Innes, Bluegrass Institute, but there was no action on the reg and no legislator questions.  Linda Hampton, Governor's Office of Early Childhood gave an overview of Early Childhood Education in Kentucky, her slides are HERE. The Homeschooling Presentation was a repeat of an OEA presentation of their report on homeschooling that can be found HERE.

For a full summary click HERE.

Economic Development and Workforce Investment

Recently named Acting Secretary of Economic Development, Vivek Sarin, presented on the status of the State's Economic Development programs.  The Secretary focused on workforce needs, permitting needs, and access to new/existing suppliers/customers. He also discussed his cabinet's budget needs.

Dr. Jay Box, President Kentucky Community and Technical College System, gave a presentation on the Work Ready Kentucky Scholarship program and how SB 98 (2019) expanded the program to include awards for summer terms, eligibility from secondary to postsecondary if a student uses for dual-credit classes, and removes the requirement for Dual Credit Scholarships be used first.   

Additional information can be found in the meeting materials HERE and a full meeting summary is available HERE.