Kentucky.

Tonight, I'm Renee Shaw and we thank you so much for joining us this evening.

We continue following negotiations in Frankfurt over the roughly $30 billion, two year state budget.

Today, key House and Senate negotiators announced they had a deal to reconcile the separate state budgets passed by the two chambers.

It's expected lawmakers will vote on the budget deal tomorrow or Wednesday.

If passed, a final version of the budget would then go on to Governor Andy Beshear for him to sign or line item veto to discuss the budget.

We have three guests in our Lexington studio.

State Senator Chris McDaniel, a Republican from Ryland Heights and chair of the Senate Appropriations and Revenue Committee.

State Representative Lindsey Burke, a Democrat from Lexington and House Minority Caucus chair, and Anne Tyler Morgan, an attorney and member of the law firm McBrayer PLLC.

And in our Louisville studio, we have state Senator Cassie Chambers Armstrong, a Democrat from Louisville, Senate Minority Whip and a member of the Senate Appropriations and Revenue Committee.

We certainly want to hear from you tonight.

You can send your questions and comments by X, formerly Twitter at Pub Affairs KET, or send an email to KY tonight@ket.org, or use the web form at KET dot Johnny Nash KY tonight.

Or you can simply give us a call at one 800 4947605.

Well, welcome to all of our guests and what timing we certainly have tonight because chairman McDaniel, just today, around three ish, you all announced a budget deal for House Bill 500, which is the executive branch budget.

Can you give us the nut graph of what's in the budget and perhaps what isn't?

>> Sure.

Absolutely.

Renee.

So thank you for having me tonight.

And yes, absolutely.

We've largely finished the work.

I should start out by saying the free conference committee report is not actually published and signed yet.

And so until that happens, obviously there's there's there are potentials, but by and large, the budget is finished.

And so I would say some of the biggest highlights are the ongoing success that we've been able to see through a disciplined budgeting process.

Last time around, we were able to make record investments in countless areas as well as continue to to put in place and work on the reduction of state income tax.

And you see some of those same themes come around this time.

So the the top thing that people always want to know about is what happens in education, right?

And inside of the K-12 space, the biggest area is what's called the SEEK formula.

And we increased the funding inside of the SEEK formula by 2% per year over the course of the biennium.

>> That's going back to the House plan.

>> That's going back to the House plan.

Correct.

And at the same time, inside of of that budget unit, we were able to fully fund the health system at the at the way that the governor had requested for the state's teachers and also for the state's employees.

We also.

>> Know employment contribution cap.

Correct?

>> That's correct.

A lot of those things that had caused some concern earlier, we did not address those this time around.

So it will be just like the governor had had it in his.

We also were able to fully fund the state's pensions.

Both the state police and the Nonhazardous plans.

And then inside of higher education, you know, by and large, most universities will see the same base as last time.

There will be a few miscellaneous cuts here and there, but in the performance funding we put another $5 million per year.

That is our financial accountability mechanism for the Commonwealth.

And, you know, we were proud to be able to continue to invest there so that those are the biggest areas that we saw.

We saw some additional plussing up inside of Medicaid.

We have a specialty Medicaid fund with $290 million in the event of cost overruns and and countless other areas as well.

>> Yeah, that was referred to as a lock box.

So explain a little bit more in depth what this concept is.

>> Yeah.

So in essence, we, you know, there is no area of the state government where the costs are increasing nearly as quickly as they are in the Medicaid space.

And we really need to bring some cost control into that space.

And so what we did is we put that $290 million there for the administration to be able to return to us and, you know, hopefully work on some cost containment measures.

But if they aren't able to fully contain them there, there is some available funds for them to come to us and to at the beginning of the 2027 session.

So just keep in mind, you know, right now there will only be six months into the fiscal year.

Ideally, they're able to find some savings.

And that really should be the challenge that this administration takes up is how do we make Medicaid a more affordable program in the Commonwealth.

And so there will be this fund there for them to come back to the General Assembly.

If they're not able to figure out how to to execute some savings and ask to get into it.

>> Representative Lindsey Burke, you were there during the budget conference committee session this afternoon when all of this was announced, and you had asked about that $290 million Medicaid lockbox.

Do you understand that clearly?

And does that give you some consolation that the services will be there for those who need those Medicaid services?

>> Well, thank you, Renee.

I think the lockbox is an interesting concept, and I'm glad to know that there are earmarked funds available.

Should we run into budget issues with Medicaid?

I don't think it's really a question, though, if we're going to run into those budget issues.

The question is not so much if, but when.

And I hope, just as Senator McDaniels has said, that we'll be able to contain the cost of the Medicaid program.

But unfortunately, not to sound too radical here, as long as we have multiple Mcos and we are not moving toward a single payer system, the costs are just going to continue to increase.

The federal government is not doing us any favors either.

The cuts from the federal level through HR one are going to be felt in Kentucky.

And so I think we need to be really ready with that lockbox and have very clear standards by which it can be opened.

>> I want to ask Miss Anne-Tyler Morgan, because you I often have you on programs specifically about Medicaid, because you've been around this particular field for a long time.

How do you interpret this?

And do you think that that $290 million Medicaid lockbox is a good idea?

>> Yes.

Renee, thanks so much for having me on again.

And thanks to Chairman McDaniel and my fellow panel members for everything that you've done to make this budget happen in this session.

I know it's a lot of work.

I do think the $290 million is obviously very helpful to have.

Obviously, the budget is not the only legislation this session that is addressing Medicaid costs.

We have House Bill two, which I'm sure we'll talk more about.

That's up for committee tomorrow.

And I know that that addresses a lot of cost containment measures as well.

And there are also a lot of workforce bills that touch the Medicaid space and to get people back into the workforce, because really, I think the main driver of Medicaid cost containment will be getting people into the workforce and allowing Medicaid to be a true support for those who still need it.

So I think we'll get more into that.

But I think that the $290 million certainly shores up the potential for additional costs down the road.

>> Senator Cassie Chambers Armstrong in Louisville, I'll come to you and ask you for your reaction about that particular provision.

>> Thanks, Renee.

I agree with chairman McDaniels that, of course, it's important that we make sure that Medicaid is spending tax dollars in a way that's efficient and in a way that is being a good steward of those.

It's also really important that we think about accessibility to Medicaid, because we know our most vulnerable populations rely upon it, and it can literally be a matter of life and death.

And the reason I just want to explain for the folks at home that it's so important that we fully fund Medicaid, is every dollar we put in as a state is matched by $3 from the federal government.

And so the risk that if we underfund Medicaid is not just that we miss out on that dollar, it's that we miss out on the other three that come down through the federal government.

And so I'm interested in learning more about the lock box.

I think it's a creative idea.

My main concern is going to be, are we able to access it in a way that makes sure those vulnerable populations have access to that critical care when they need it?

>> And so while we have you and I should say to our viewers at home, we have a little bit of a delay between us and Senator Cassie Chambers Armstrong, who is in our Louisville studio.

So that accounts for the little bit of lag in the communication.

But get your overall thoughts, Senator, about what you think of the budget compromise as it stands now, and what is missing, in your view that should be included?

>> Well, I'm going to start with the positive.

I was so thrilled today to learn that Imagination Library is in the budget with its same full funding and with the 50% match.

I think this is one of the most important programs that we invest in as a state.

The outcomes for kindergarten readiness are just off the charts.

It actually performs even better than some pre-K programs in terms of getting kids ready on those kindergarten readiness metrics.

And so I was just so thrilled to see that and also thrilled to see language that's hopefully going to direct our cabinet to work on prioritizing foster families and low income families for enrollment.

The cabinet has access to a lot of information and resources to reach vulnerable families, and bringing those resources to bear to partner with this program to make sure that every single vulnerable child has access to books, I think is one of the best things that we could be doing as a Commonwealth and something that will absolutely end up changing lives.

While we're talking about early childhood education, I have to say I am always disappointed when I don't see pre-K funding in the budget, but that is something we'll continue to talk about, and I will always continue to champion early education.

Broadly defined, there are a lot of ways we can invest in families.

>> I want to go to you, Chairman McDaniel, because you made a joke during today's announcement about Dolly Parton.

And even though she is not a Kentuckian and who knows what her party affiliation is, she's probably the most popular person in Kentucky, hands down.

And even if it's not even her thing, you know anything with her name attached to it.

Certainly you get a lot of feedback on because we know that, that the funding for that has kind of gone back and forth.

Are you satisfied with where it's landed?

>> Yes, absolutely.

You know, and Senator Chambers Armstrong and I had a conversation very early in this process about one of the things she was really looking for was to see foster children being serviced more via this program.

And as that advanced through it, it was it was her advocacy that really led to that additional line or two that trying to ensure that they were kind of getting first call on some of these things.

>> Right.

So a couple of questions about just logistically, there's House Bill 500, which is a state executive executive branch budget.

Then there's House Bill 900.

That's one time.

And then there's House Bill 757.

That's revenue.

Okay.

Can you sort out the other two for us and where they fit into the puzzle of House Bill 500?

>> Sure.

And this is always one of the complicated parts about state budgeting, because people think that there's a single document relative to that, and there's actually 5 or 6 documents.

Once you begin to throw in the road plan and some of the supplemental things that go along with it.

So the state's budget is, is very complicated and has many, many parts.

You referenced two of them, first of all, House Bill 757.

So this is something that we do every budget cycle.

It's the revenue bill, which actually enables the tax code and makes changes to the tax code that are necessary for the collection of the revenues to be able to be implemented on behalf of the spending plan.

Then you reference House Bill 900.

That's our one time spending bill, where we will take up many, many items, some very big and some very small across the Commonwealth.

And those items will represent, like we said, one time investments as a result of the disciplined budgeting process that we have engaged in, we have found ourselves with a rainy day fund, which is the states Commonwealth or the Commonwealth's savings plan, with an incredible balance.

And the fact is, when people pay taxes, they don't pay it so that it can just sit in a savings account for people to feel good about.

It needs to be returned to the citizens of the Commonwealth in long term investments on their behalf.

And so House Bill 900 is a is the result of a lot of discipline.

And the results of it will be long term benefit for the citizens.

>> And that's around $800 million, right?

>> It will probably well.

>> Over $800 million.

>> Well over how much is well over, Mr.

Chairman.

>> We'll find out shortly.

>> Okay.

So that is that still in progress or has that been decided at.

>> This juncture?

There's still a few tweaks to be made to that bill.

>> And when it comes to House Bill 500, is are we at a final document?

And could a vote come on that as early as tomorrow?

>> A vote could come very, very soon.

Once the free conference committee signs off on the report, you could expect a vote in very short order.

>> Or is there still some conversation about what else could be included in that or stricken from that at this juncture?

>> Well, there's always until there's a final vote, there's always conversation.

>> I know you know that very well.

Representative Burke.

>> Yes, absolutely.

>> Yeah.

And go ahead.

>> I am really interested to see what we'll be doing with House Bill.

757, the revenue bill, because I thought that there were still a few pieces of low hanging fruit available and brought those to Chair Petrie to discuss.

I filed them in the form of floor amendments, and I hope that perhaps some of them could be included, because I think Kentucky needs every dollar we can get.

The particular amendments that were proposed dealt with things like trusts that are kept out of state or directed trusts, foreign income from business done overseas, the kinds of things that average Kentuckians don't even know exist and wouldn't understand if I tried to explain them, because they're really complicated.

And frankly, they only really would matter to a small handful of Kentuckians.

So HR one opened several opportunities, and we had the opportunity to either follow suit or do what's called decoupling.

And there are some opportunities for us to decouple, which would yield more money for Kentucky.

So I'll be really interested to see what we do with that.

>> Interesting.

Well, this question from Martin Rivers and Lexington.

He says quote or asks quote, why is there such secrecy in the creation of the budget?

Senator McDaniel and Representative Petrie keep the legislature's most important activity every two years in the dark, and only the last couple of days of the legislative process does it slowly become evident.

Your response, Mr.

Chairman.

>> I would argue that we, since I've been here between Chairman Petrie and I, we probably have the most transparent, most participative process that I've dealt with.

We have committee hearings throughout the course of the interim.

We have committee hearings throughout the course of the regular session.

We present our budgets in public.

We allow them to sit on the floor.

We have free conference committees where we air our differences somewhat in public.

And then certainly like any negotiation, there are things that go on outside of the public eye.

But by and large, I. I have never dealt with a house that was as open and in a Senate that is as open as chair.

Petrie and I are in this process.

>> Senator Chambers Armstrong do you care to comment on the negotiation process and the transparency of these budget talks, and how involved is the minority party in crafting the final version of the budget?

>> So I think the chairman is right that by the time the budget clears both chambers, most folks have an understanding of what are the programs and the issues where you're going to see disagreement and you're going to see conversation.

What the public doesn't necessarily get are some of those last minute decisions that are being made as we approach the veto deadline, and we're sort of struggling to get everything in and through under the radar, I will say just one difference I've noticed between serving on Metro Council and local government and serving in Frankfurt is in Louisville and local government.

We had a rule that you could not have a majority of any committee or a caucus meeting that wasn't open to the public, and I think that that was really good, that we saw some of those conversations happening in public in ways that were open to folks and open to the press.

And of course, we don't have those same rules in in Frankfurt, the minority party.

I am very grateful to the chairman.

He does come and he briefs our caucus.

He meets with our members about our concerns and about our priority projects.

And so I'm really grateful for the way that he makes real efforts to include us in the process.

>> Questions about what agencies still would get the 4% or 3% cuts.

Can you elaborate on that?

>> Sure.

So by and large, most executive branch agencies would find cuts like that.

Where you won't see those occurring are things like the Kentucky State Police Department of Corrections.

As I referenced, the SEEK formula will not see those cuts.

The post-secondary education will not see those cuts.

But most of the executive branch agencies will see those cuts applied.

>> Yeah.

A question from Kenton County.

Mr.

Chairman.

Have there been any scientific studies conducted to assess the causes of the increases in Medicaid spending?

And if yes, what have been the results?

And maybe Anne-Tyler Morgan could comment on this as well.

I'll let either one of you go first.

>> You know, it's very, very interesting.

There are countless studies that are ongoing related to Medicaid, and the results are all over the place in in a budget that is that big, the there's plenty of blame to go around.

Now.

There are some things that just are naturally happening.

Medical inflation costs are are tremendous in this nation, and we can't deny that.

But there are things about the utilization of care or not utilizing care.

There are things about individual behavior inside of there.

There are things about insurance companies inside of there.

But at the end of the day, every day, Kentuckians are paying more than twice into Medicaid than they were ten years ago.

And that's a real problem.

>> And Tyler, what can you expand on that?

>> Well, Renee, a lot of the usual suspects are what are behind Medicaid costs.

And when I say usual suspects, I do mean utilization patterns.

Of course, emergency room usage is a very high Medicaid cost driver, and unfortunately, Kentucky is still seeing poor health outcomes among a lot of its population.

That's a really unfortunate fact.

And of course, when you have an unhealthy population, you have high medical costs.

And so when you pair a large population that is utilizing the Medicaid system and needing services that are very expensive to provide, more and more expensive as time goes on, unfortunately, we are where we are with the cost of Medicaid.

>> And while we're here, let's just put a pin in it and talk about House Bill two.

We know the representative, Ken Fleming, had been on this program 2 to 3 weeks ago, and we talked for an hour about House Bill two.

Give us kind of the nut graph of what House Bill two does in terms of that cost containment.

>> Sure.

Renee.

When I think of House Bill two, I think it's a continuum of the conversation that the legislature has been having for some time now with regard to its desire to oversee the Medicaid program in a lot more detail.

Of course, we have seen the establishment of Mo.ab, the Medicaid Oversight and Advisory Board, and now we see House Bill two giving Mo.ab more oversight mechanism and requiring a lot of specifics of both the Department for Medicaid Services and the managed care organizations that implement the Managed Care Medicaid program, which of course, is the majority of Medicaid beneficiaries mechanism for accessing that program.

So House Bill two goes into a lot of detail, and I know there are a couple of points that have been talked about on your program previously, so I'll try to avoid those since those have been discussed.

But I think that some interesting things in House Bill two really relate to the reporting that would go on by the legislature.

I know there is also legislation regarding a centralized health data system, but that's also encompassed in House Bill two for a lot of the Department for Medicaid Services programs, the data on which it runs to be directly accessible to LRC and to the legislature.

And I think we just see that the legislature wants more information to be able to make those budgetary decisions, which makes sense considering the vast amount of the budget that Medicaid takes up.

And I think the legislature has been fairly frank in saying that they don't always trust the numbers that the department has provided to the legislature.

So, right or wrong, this is the legislature's way of saying, we're coming in and we're we're going to access that data ourselves.

We're going to make our own decisions about Medicaid.

Obviously, there are some squeezes that House Bill two puts on certain companies that operate within the Medicaid system.

And those companies, the managed care organizations primarily have, of course, been vocal about what that might cause them.

But I think something that's interesting and something that's difficult with Medicaid is that the capitation rates that are paid to the managed care organizations have to be actuarially sound.

It's a very complicated capitation rate system.

And so we do need to be cautious when legislating Medicaid that we are complying with federal requirements.

And I think it will be interesting to see whether tomorrow's committee meeting addresses any of those concerns that we have to be federally compliant.

>> And folks can watch that on KET, on air and online.

I want to go to Representative Burke about because there was a lot of conversation about House Bill two, particularly the determination and redetermination process and the amount of reporting.

I think maybe either you or other of your Democratic colleagues raise that as a big point of contention.

Tell us more.

>> Yes.

There are several elements of House Bill two that were concerning to us, and I'll be very curious to see where the Senate lands on some of those things, because I understand that there may be changes coming.

We were concerned about co-pays.

Of course, we're concerned about going further than what's required by HR one.

And then also.

>> And that's the one big, beautiful bill in Congress that they enacted last year.

Just to clarify.

Yes, yes.

>> That put requirements in place that Kentucky needs to meet.

And obviously that is something we should do.

But one of the things I wasn't so sure about was making a long term commitment to that strategy.

And essentially decoupling ourselves from the federal government in that way, because if Congress changes their minds, which we know they do, I don't want to be stuck with harder things for Kentuckians.

And that's kind of what it's looking like if we stick to a higher standard with more regular certifications, higher co-pays than what is required, and then the federal government chooses to walk that back.

I really don't want to see Kentuckians stuck with the higher and harder things.

>> Yes.

Senator Cassie Chambers Armstrong, I'll let you chime in here about House Bill two.

And this is the Medicaid reform effort.

>> Sure.

So there are a couple of things in House Bill two, as it came to our Chamber that concerned me.

Co-Pays always concern me, even when we're talking about low co-pays, $20, $35 for low income folks who are trying to decide whether or not to take a sick child to the doctor, $20.30 $5 can absolutely influence that choice, and sometimes not seeking that care can lead to higher costs in the long run.

Also, I just believe that any parent dealing with a sick child shouldn't have to make choices about whether or not to seek medical care for that child based on their financial situation, and being worried if they're going to be able to afford that care or not.

Also worried about the self-attestation provisions, the fact that it can be really hard when you don't have anything to prove a negative, to be able to say, I, I have nothing, but you can't produce documentation to show a lack of assets.

And so that was a provision that concerned me.

I will say we're at the point in session where bills are changing very, very quickly.

And so I expect that when we see House Bill two tomorrow, we will see it change.

And I just don't know if we're going to see it change in ways that I think are better or in ways that I think are worse.

And so one of the challenges when we get to this point in session is trying to make those decisions on these big, impactful bills without the ability to consult with experts and consult with community and consult with all the different folks that we would normally like to sit down and have those conversations with.

We have to make decisions really quickly, and it's challenging.

>> Miss Morgan.

>> Sure.

Thanks, Renee.

As to the Self-attestation requirement, I do think there's some help in House Bill two with regard to the department's ability and requirement under the legislation as it stands, to actually seek other sources to determine folks ongoing eligibility.

I know there would be a partnership with the Social Security Administration to check that database, and there are countless others they are required to check, for example, lottery systems, correction systems, the Paris system to see if people are enrolled in other states.

I think those are good measures.

You know, ultimately, if there are people on the Medicaid rolls who shouldn't be there because they're living in another state, and yet the taxpayers are paying a capitated payment for that person, you know, that really is taking money from people who are on the Medicaid system, who are beneficiaries of that system and really need that payment.

So I think those are really important parts of the bill.

There are also some kind of intricate pieces that I think are helpful to the system.

For example, for our waiver programs, our waiver programs often operate on waitlists, as anyone who's gone to utilize those services know, those waitlists are long.

They're difficult.

When you have someone who really is in need of waiver services to wait for those spots to open up.

And House Bill two creates a tiered system so that there would be an emergency status available to people to utilize those waiver slots and create some requirements for utilizing those slots that really should be beneficial to that program, which often stays logjammed.

So I would caution anyone who's discussing House Bill two to not throw the baby out with the bathwater, because there's a lot in here that's really helpful, even including a Medicaid impact statement on new legislation that might impact the cost of the Medicaid system or even enrollment within the Medicaid system, that people really have to consider the system as a whole when they touch Medicaid.

And I think it's particularly interesting, having worked at Medicaid, there's a requirement that new administrative regulations would have to go before mo.ab, 30 days before they're filed with the regs compiler, which honestly should help regulations move along more quickly.

If that input or insight is already taken into account by the time a regulation is filed.

>> Along those lines of public assistance, we've gotten this question has the Kentucky General Assembly addressed funding and cost sharing concerns related to administering Snap funding for programs like Summer E, B, t and senior meals, especially after last year's challenges with federal funding and disruption of services.

Mr.

chairman.

>> Yes, I think that I'll touch on the the first piece first, and then what they're talking about is the SNAP administration costs.

And there's two components to this.

The first is the administrative fee.

So the federal government has changed the amount of reimbursement they will provide to the state for administering it.

That was fully funded in the House budget.

That's also fully funded in the Senate budget, and you'll see it emerge fully funded.

And this one, the second portion of this is what's called the SNAP error rate.

And this is a calculation from the USDA regarding how much an over or under payment that we're making throughout the system based off of an audit that they will conduct.

The current audit places us in a very problematic space, because we have too much error inside of our SNAP system.

We're assured from the administration that they have corrected those problems and that they are getting the error rate under control prior to it actually being implemented.

The good thing is, it appears that it won't hit inside of this biennial budget.

But if they are not correct and they have not brought it under control, then in the next biennial budget, it could be very problematic because you could be looking at several hundred million dollars in expense to the Commonwealth.

But frankly, it's a program that the federal government needs to bring under control.

And the fact that you can have states with error rates, some as high as 20% inside of this program, really speaks volumes to the lack of controls that are existing.

And frankly, these are taxpayer dollars.

And in the federal government's case, these are taxpayers, children and grandchildren's dollars before they even start paying taxes.

And so, you know, the idea of bringing accountability and responsibility into the system isn't a bad one.

And sometimes that gets painful on state budgets, but nothing will influence people more quickly than to begin to have to pay out of their state budget.

And I think that you're seeing that across the nation right now.

>> Where is Kentucky's error rate?

>> I think that we were around 8%.

But my understanding is I believe we're down under six now is what the administration.

>> Burke, I think you mentioned this or talked about the error rate.

It could be underpayment overpayment.

Not exactly sure where the error is coming.

Right, right.

>> It can be so many different things.

The rate that was just quoted is higher than what I've heard.

And so that makes me concerned that.

>> Who's giving that rate, who's, who's making that determination and where that where is that number coming from?

>> Well, the USDA is doing so at the federal level, but then we also have to have internal controls so that we're not sitting ducks getting terrible news.

So within the state, the office of the State Budget director keeps an eye on that, making sure that C, h s is operating that program efficiently.

So I hope that the number I'm hearing, which is closer to 4%, is where we are.

If it's not, we need to definitely get that under control.

>> Let's talk about the senior Mills.

That was the second part of the question.

How is that being addressed in this budget?

As we understand it right now.

>> We're optimistic that the budget that we put out fully funds senior meals.

You know, we had a very a difference with the administration in the last budget.

And we went with their recommendation.

And it turned out that the higher number that we had was the correct number.

And so we think that that's been corrected.

And we think that it's fully funded at this point.

>> Any comment on that?

And, Senator Chambers Armstrong, I'll have you jump in here on either the SNAP or the senior meals.

>> I think it's really great to hear that we're going to fully fund senior meals.

It's obviously so important.

I just believe that one of the things we should do as government is make sure that anyone who is at risk of going hungry has food.

If there are programs that we can participate in at the federal level, let's do that.

If there are ways we can deliver meals to seniors, let's do that.

It does concern me the way that we see the federal government attacking a lot of these programs that so many Kentuckians depend on, and my hope is that we stand up for Kentuckians.

We make sure that when the federal government is doing things that are going to hurt Kentuckians that we say that and we say that loudly.

One thing that has concerned me in recent years is I've seen this General Assembly move towards giving a lot of its authority away to Washington, D.C.

passing rules that say, we won't make any workplace safety regulations that are more strict than what Washington, DC says.

We won't do anything beyond what Washington, DC says in this particular field.

It worries me because I think this body is the best situated to know what Kentuckians need and how to meet those needs.

That's why I'm really grateful for the budget process.

It's a way for us to talk about the needs we see in our communities and make investments in those.

And so my hope is that we, as the Kentucky General Assembly, continue to stand up for Kentuckians, stand up to Washington, DC when we need to do that and make sure we're meeting the needs that we see in our communities.

>> This question from Adam Haley in Louisville.

He says much has been made about attempts to grow Kentucky's workforce participation rate through benefits reform.

What ideas are being implemented to encourage people to enter the workforce while mitigating or avoiding the benefits?

Cliff effect that many low wage workers experience?

Has that come up this session, Mr.

Chairman?

>> Yeah, absolutely.

Particularly in the childcare space and some of the things that we're doing to help ensure that as people come off of public assistance, that they can move into the workforce because, frankly, it's an unfortunate reality where the federal government has created a system whereby for a lot of people, it makes more sense to not work.

And that is a fundamental problem.

Work gives balance to life.

It gives meaning to life, it gives people purpose.

And, you know, and there's a certain pride and self-sufficiency.

And when the government provides such an economic incentive to not go to work every day, to not be economically self-sufficient, we do things to the population that are frankly unconscionable.

And so helping people break that cycle, to get off of that dependency and into the workforce is very much on our minds.

We do lots of things related to job training and helping people scale up so that they can earn more money.

We do things related to childcare, trying to work around solutions related to the health care space and all those things to make sure that people can successfully transition into the productive employment space of society.

>> Yeah, Miss Tyler, and maybe give us a working definition of what a benefits Cliff is.

Perhaps.

>> So the benefits, Cliff Renee, is when someone is coming up in their working life to the point where they're earning so much that they have to come off of benefits, but they're still not earning enough to really get by in today's economy.

And so they fall off what we call a benefits click.

They're making just enough to where they don't qualify for benefits, but they really still need some support because they're not making enough to sustain themselves to the level that we would like for them to be able to in today's economy.

I do think there are several bills that are aimed at workforce.

To Adam's point, we do have House resolution 126 right now, which is aimed at asking the federal government to provide flexibility to a state like Kentucky in addressing the benefit cliff, which I think would be incredible for Kentucky to be able to do.

Obviously, we are somewhat pinned in by the federal government on certain health care programs.

So seeking flexibility to allow us to be innovative would be great.

We have a lot of workforce bills in the health care space, including we have the expansion of the health care credential for the workforce program, and that was for particularly speech language pathologists and audiologists.

And I think it's really important to think about the spectrum of people who are able to benefit from that health care workforce program.

I know we also have you spoke of SNAP.

We had unanimous approval of this SNAP employment and training program, which creates individualized plans for people who are benefiting from the Snap program to be able to enter the workforce and to be able to utilize the Snap program effectively.

So I've seen a lot of legislation coming through that isn't discussed as often, but is really important when it comes to our state's workforce.

>> We've gotten a couple of questions about the 13th check, Mr.

Chairman, or a cost of living adjustment for state retirees, public workers.

Tell us about what's what's there.

>> Yeah.

So, you know, the conversation about what to do with state employee retirement plans that have been working on recovery for quite a long time now continues to go along.

I would say the 13th check will probably be more one of the more problematic issues as this rolls out.

It is an ongoing conversation.

It's something that I think every member of the General Assembly wants to do something about.

And so we have varying approaches as to what that looks like.

Some folks would advocate for a Cola or a cost of living adjustment, which is very, very expensive.

Some advocate for a 13th check, you know, and those conversations I would anticipate will continue on as we move forward.

>> And you only really have two more days, Mr.

Chairman.

So you see reconciliation on that.

>> I you know, it probably will not be something that you see included in a final product.

>> And so that means it's dead if it's not included in a final project product.

>> Quite possibly.

>> So.

Quite possibly.

So do you have any comment on that?

Representative Burke.

>> I do, I think it's a real shame that we won't be able to use the Budget Reserve Trust Fund to at least do a one time 13th check for retirees with the cost of living being what it is right now, I was I'm driving to Frankfurt all the time.

So $4 a gallon gas is eating up our budget, and then we go to the grocery store.

And what used to be a $200 a week spend is now closer to $300 a week.

And that's not any different for retirees.

So the fact of the matter is they haven't had an adjustment in more than a decade.

And right now, they're really the ones that were balancing our budget on the backs of that's not fair, because they've done their service for the state of Kentucky, and they really deserve that 13th check.

I believe that of the $2.5 billion it seems we're going to have remaining in that budget reserve trust fund that we could afford.

Is it 80 million?

I think, for the 13 million check?

So we have it.

And our decision not to spend it, I think is disrespectful to retirees.

>> So that could come in the form of House Bill 900.

If using it as one time money, is that a likely avenue for a 13th check if it can even get there?

>> Well, I think I have to disagree with the fundamental mischaracterization of balancing the budget on the backs of this, because there is no area inside of the budget outside of Medicaid that is seen as much investment from the Kentucky General Assembly as the underfunding of the retirement systems, both both the teachers retirement system and the Kentucky Retirement System.

When when I came to Frankfort, you know, 12 years ago, this Commonwealth was bordering.

If there was one financial anomaly, we very well might have defaulted on pension payments to the pensioners.

And we had to do some very, very, very difficult things on the front end and also on the financial end and the the rapid acceleration of the funding of those pension plans is something that we should all be very proud of and making sure that the base level pension that was committed can still be paid.

And so while it might not be everything that everyone wants, the Commonwealth's budget is certainly not balanced on that necessarily.

And the additional dollars that we are putting in are taking us into a place where someday we will be able to have these conversations and ideally, more regularly.

I think everyone would like to see us where we can return to a point of having regular cost of living adjustments.

But part of the reason that we ended up in this space in the first place is General Assembly's.

Prior to either of us showing up in Frankfurt.

Granted Colas without ever preparing to pay for those colas, and they left an absolute mess for us to have to deal with.

Which we have.

And while people may not like every decision that we have to make, they have to realize that those are the hard decisions that we have to make.

And truthfully, but for the modern version of the Kentucky General Assembly since about 2014, we very well could have been in a position of not making pension payments.

And that's the real story here.

>> Yeah.

Senator Chambers Armstrong, do you care to comment on Colas or the 13th check for state retirees?

>> Sure.

I thought the Senate proposal made a lot of sense.

I thought it was a nice, balanced approach with sort of different gradations of a 13th check based on when folks retired.

I'm sad to hear that it's not in the final budget, but I hope that we'll continue the conversation and will continue.

I will continue to advocate for that in future budgets.

>> I do want to make a pivot now.

The time flies so fast.

Senate Bill 185 that this is the.

I want to ask you to characterize it, Mr.

Chairman.

Is it a rescue plan for Kentucky State University or is it a state takeover?

Because I've heard both descriptions.

How would you describe this plan for Kentucky State University?

>> I would describe this plan as the most optimistic, forward looking plan that Kentucky State University has seen in a generation.

I would describe this as a transformational plan to ensure that the students who receive a degree from Kentucky State University are receiving a degree that when they walk out, that workforce will bring them the maximum earnings potential that they can possibly have.

And I would say that Senate Bill 185 will be something that we will look back on and say, that was the day that Kentucky State really took a turn for the positive.

And I could not be more excited about what Senate Bill 185 is going to do.

On behalf of the students of Kentucky State University.

>> So this would transition the mission to be a polytechnic institution, which focuses on work study programs and science technology engineering type programs.

Some are concerned that it puts the HBCU designation in jeopardy.

Will K State, as we call it, remain a historically black college university?

>> Absolutely.

Kentucky State will be an HBCU in this General Assembly, since I have been here, has maintained its commitment to a public HBCU inside of the Commonwealth.

It is important.

It is important that we have a vibrant and successful HBCU in the Commonwealth and Senate.

Bill 185 not only will ensure that we have an HBCU, but it will be the best HBCU in the nation.

>> What are the benchmarks that you'll be using to grade its progress, and will there be a time determined where you'll say, time is up for K State to be what we know it to be now?

>> Sure.

So this is a five year plan to transition into a polytechnic institution.

And so there there will be teach outs for the existing on campus liberal arts programs.

But K State has to its been to its credit, invested very heavily in online learning, and they're beginning to see some success in that space.

They're beginning to see some revenue driven in that space.

And we're going to help them double down in the online learning space.

>> Because that's where all the liberal arts program offerings will be.

They'll be moved to online.

Is that correct?

>> With the exception of the education program, yes.

Now there will still be liberal arts offerings on campus as it relates to the attainment of a degree inside of the polytechnic mission.

But yes, the the actual degree completion will move online for liberal arts.

And this is not necessarily atypical in university spaces around the nation.

And really in Kentucky, you need to look no further than the University of the Cumberlands and the success that they have seen.

I mean, they really are driving a vibrant on campus experience via their online offerings.

And I believe that Kentucky State will do the same.

>> There was some concern that was mentioned by one of your colleagues, Democrat Couture Heavrin, about some of the academic entrance requirements, the GPA of 2.5 and the college entrance exam composite of of 18.

Concerned that that might lock some kids out perhaps who do not test well.

Do you want to comment on why those academic standards were instituted?

>> Absolutely.

Because if you're going to produce the best, you need to recruit the best.

And that's what Kentucky State is committed to doing their leadership.

The leadership of the Council on Post-Secondary Education is committed to making sure that we recruit the best into Kentucky State University, because the.

Via that we will produce the best.

We have a robust system to help young people to achieve high standards, both in the K-12 system and then afterwards.

So if people are finding themselves not able to meet those standards, then there will be opportunities for them to raise themselves up and do it.

But we but to get into an institution of a higher institution of higher learning, there should be high standards and Kentucky State should not be relegated to an institution that accepts mediocrity.

I don't think that they will, and I don't think they will produce it either.

>> Senator Chambers Armstrong, I want to come to you to ask your opinion about Senate Bill 185, on which you voted just last week on because some have also described Kentucky State University not just as a land grant and not just as an HBCU, but also Frankfurt's higher ed institution that the city takes pride in.

Kentucky State University, your thoughts about this measure?

>> Yeah, I think we all take pride in Kentucky State University, and I am rooting for K state.

I think everyone is rooting for Kentucky state.

I'll be honest, when I first saw the bill, I had a lot of questions.

I was not as familiar with some of the prior conversations and the work of this General Assembly, and really the question at one point as to whether it was going to continue as an educational institution in the Commonwealth.

But I had conversations with our leader, Senator Neal, who is the biggest advocate for Kentucky State that you will find.

He is an alumni.

He is dedicated to the program, and I know that he worked closely with Chair McDaniel, and he worked closely with all of the stakeholders.

And I think when you see everyone coming to the table, all the different stakeholders from the administration, from Kentucky, State, you had Louder Neal from the Democratic Caucus, you had chair McDaniel all working together in good faith to figure out what can we do to help Kentucky State continue into the future?

There are still some things in the bill that, you know, I have questions about, and a lot of it's going to be how are they implemented?

But I believe that this is going to lead to Kentucky State continuing as an educational institution, as an HBCU.

I'm really glad that this bill also came with a commitment of funding for Kentucky.

State.

And so I'm excited to see how all of this plays out.

>> So the President of Kentucky State University, President Akakpo, he actually sent out an email to alumni who have been voicing a lot of their concerns.

And he says, and this is emboldened in the letter he sent, he said, let me be clear, no current student will be forced to transfer.

All current majors will continue for enrolled students.

We are not becoming a community or two year institution.

We will have more than 1000 students, maybe more on that.

Our band, athletics, student organizations, fraternities and sororities will remain.

I want some clarity on that.

And our HBCU culture remains central to who we are.

A couple of those points when it comes to sororities and fraternities, there is some language that would require them to reapply, so perhaps you can clarify where that stands.

>> Yeah.

So I mean, the they will have to reapply.

I think that President Akapo is genuinely committed to, I think seeing all of them return.

But some of the issues that we saw surrounding Kentucky State dealt with some off site fraternity parties.

President Akapo has already removed that fraternity from the campus, and we just want to make sure that there are maximum there is maximum flexibility to weed out bad actors because we will not tolerate anything less than excellence.

And President Akapo is committed to that.

The General Assembly is committed to being president, his partner in that.

And if there is a problematic area, we're going to give him the ability to address it, and we don't want there to be we want there to be a vibrant fraternity and sorority life that is part of the overall environment.

But if there are some who cannot abide by the standards that are expected, then we want to give them the ability to deal with that.

>> On the thousand student.

Is that a threshold?

Is that the floor or the ceiling?

>> It's actually just a marker because the there was a there was an amendment that we put on there saying that the the faculty and staff that we retained would be retained with a target of 1000 students or more.

So as the restructuring of the university must occur, you have to have some type of a marker from the General Assembly.

So certainly right now it's our understanding there's about 1000 residential students engaged, although there are more going to school on campus, but about 1000 residential students right now.

So look, I would like to see Kentucky State grow and thrive well beyond that number, but we have to be realistic about what a transition looks like and provide some targets.

And that was the target we chose.

>> I want to have you, Representative Burke, to weigh in on this.

I'm sure you've seen, or at least you've read enough about Senate Bill 185 to get the gist of it.

What are your thoughts?

>> Well, I'm glad to hear that the Divine Nine will be able to re-apply to come stay on Ksuz campus, because one of the things that attracts students to an HBCU is the network.

It's being able to be part of a community that's larger than just the students who are there.

And joining a fraternity or sorority is how you gain those lifelong relationships that help you succeed as a professional.

Additionally, I was really glad to see that the Thoroughbred Marching Band is staying in place.

I was a band nerd myself, and I know that that's a huge part of many students enjoyment of college.

So those are all good things as far as I can tell.

I also was really happy with the commitment to teach out students whose majors may be coming to an end.

So I didn't know what Teach Out meant.

But that means that if you've started a degree program, you can finish that degree that you've started, you're not going to be forced into some different area of study.

I think that really matters.

The one thing I would push back on is the issue of Act scores.

The best countries, sorry, the best schools in the country are going away from standardized testing.

So it's not a benchmark that lots of schools are using across the nation.

We're seeing many of the most elite institutions step away from that.

And so I'm not sure that it's going to yield the result that we're hoping for.

But we'll see with further analysis.

>> And there's quite a bit, I think most $100 million and more funding to K State may not all be reflected in House Bill 500, but in other ways.

Proposed $50 million for the Health Sciences Facility.

3 million for expanded academic and workforce alignment programs.

50 million in infrastructure and asset preservation funding, 2 million for growth and online and innovative program delivery.

>> Yes.

So two of those items are still being finalized.

That's the asset preservation.

So you'll see a very large asset preservation number that will occur in House Bill 500.

But we're still finalizing the list of what asset preservation actually looks like at Kentucky State.

So it will have some variance there.

And then also the money for the polytechnic transition, just getting our arms around what that looks like.

Exactly.

But the General Assembly intends to be a partner with Kentucky State.

And that that means in ensuring that they have high standards, but also ensuring that they have the funding to meet those high standards.

And I very much agree with Representative Burke one of the best things that can happen in college is for a young person to engage in an activity outside of the academic environment that forces them to learn teamwork and time management and self-discipline and all of those things that are essential, that aren't taught necessarily in the classroom.

But they come by challenging yourself to do things outside of the classroom.

And, you know, Doctor Akapo has maintained his commitment to those things throughout, and I'm very glad for it.

>> Pivoting now, another question for you, Senator McDaniel.

Where do we stand on reducing property tax for homeowners?

What happened to that?

There was such conversation about that before.

Well.

>> I think the real momentum in the General Assembly has remained around the idea of what do we do with income taxes?

And we have absolutely maintained a focus on it.

While it cannot be the sole focus of the budgeting process, it is certainly a focus because really that affects the the largest number of Kentuckians is the income tax, and we maintain our focus on that.

>> Okay.

A lot of questions about home housing and affordable housing.

And is there additional money going to housing?

>> Yes.

You will see additional money in housing.

>> Care to say how much?

We'll see an additional money for housing.

Do we.

>> Know what it will be north of $20 million?

>> Okay.

Do you think that's adequate?

>> I think it's absolutely better than zero.

So I'm happy to hear that there is an earmark for some housing needs.

The Budget Reserve Trust fund, hopefully is where we're going to put that 20 million.

If we could do ten and ten, that would be great.

I would absolutely love to see Senate Bill nine come to full fruition.

I think that that was a really thoughtful piece of legislation.

>> Senate Bill.

>> Nine, Senate Bill nine is about matching infrastructure, infrastructure, dollars with housing developments, because one of the most expensive things about building neighborhoods is putting in fire hydrants and all the utilities that are necessary.

So that, I think, was a stroke of genius.

I wish we could have built out further and had a much more robust housing package.

I think we just didn't quite get there this session.

And the few things that we're doing are great, and I'm glad we're working on them.

But we need about ten more tools in the toolkit.

>> Yeah, okay.

And three minutes remaining.

And I hate to shortchange this, this topic, but we have had some questions about the judicial branch budget, House Bill 504.

And there's been some concern about possible furloughs, some layoffs, the elimination or reduction of specialty courts, whether that's the drug, mental health or veterans courts.

What can you tell us about that, Chairman McDaniel?

>> Well, you know, I think that you will see some changes in the final product that the courts will like, but it won't be everything that they like.

We think the courts really need to take a hard look.

We've heard a lot of complaints, frankly, from within the court system about administrative bloat, and they're going to need to take a hard look at those.

We've also heard that there's a reluctance to implement cost saving technologies.

And finally, we've heard complaints that potentially they're delving the courts into areas that they're not statutorily enabled.

And so we really hope that the court system will take a hard look at those, be a partner with the General Assembly and helping for the provision of justice.

There is nothing more important that a society does than provide for justice for its citizens.

And the courts are at the front line of that, and we really want to be partners with them in that.

But we want them to be efficient partners in that.

And we're optimistic that this budget will reflect our commitment, but also our challenge to the courts of meeting us there.

>> Senator Chambers Armstrong, I'll give you a minute or so to chime in on your thoughts about House Bill 504 and what you'd like to see the final product look like.

>> Yeah, I think fully funding our judicial system is one of the most important things that we can do as a legislative body.

Most people don't realize how important the court system is until you are facing something in the courts, like losing your home, like possibly losing your children, like trying to get a domestic violence protective order to keep yourself and your family safe.

I'm particularly hopeful that we will be able to fully fund our specialty courts.

For folks who don't know what those are, those are courts designed to administer justice, specifically targeted at, say, veterans and people with substance use disorders, family courts, domestic violence cases.

There's a variety of ways that courts are innovating.

And what we see when courts innovate is they deliver justice more effectively, more efficiently.

It's a better experience.

We get better outcomes.

And so I'm really hopeful that we can fund those vitally important programs.

I think it's the way that justice is headed in the future.

>> Well, we thank you, Senator Cassie Chambers Armstrong, for being with us from Louisville, and we appreciate our panelists here tonight.

And thank you so very much for being here.

We'll be watching the budget as it continues to evolve, and you can watch all that coverage on k e t, either online at ket.org or on the Kentucky channel.

We are here for you.

You won't have to miss a thing.

We will give it to you unfiltered and then join us again tomorrow night at 630 eastern, 530 central on Kentucky edition, where we're going to break down what happens in the Kentucky General Assembly.

I'll be reporting from Frankfort tomorrow and Wednesday as we enter the final days of the KY GA 2026.

And then, of course, Bill Bryant and a team of working journalists will be here on Friday night to discuss the news of the week, including what happened in Frankfort that comes at you at eight eastern, seven central right here on KET.

I'm Renee Shaw, thank you for watching and have a great rest of the week.

[MUSIC] So long.