March 1, 2019 Legislative Update
Mar 1st, 2019
House Bill 358 passed the Kentucky House of Representatives on February 27. The bill now moves to the Senate for further action. President Caboni and...
February 8, 2019 Legislative Update
Feb 8th, 2019
Part II of the 2019 session of the Kentucky General Assembly began last Tuesday, February 5th. On Thursday, February 7th, President Caboni and...
April 3, 2018 Legislative Update
- Author: Tuesday, April 3rd, 2018
Last night a myriad of bills including the biennial budget, revenue bill and two pension relief bills were passed by the Kentucky House of Representatives and Senate. Below is an overview of each bill and the effects they have on WKU.
The Free Conference Committee Report of the Biennial Budget closely follows the Senate version of the budget, including the 6.25% cut to higher education. A portion of the cut to higher education was transferred to the performance funding pool in the amount of $31 million in the first year and $38,665,800 in the second year. The equity funding that was earmarked to WKU and NKU in the Senate’s version of the budget was removed in the final version and added to the performance funding pool. The funding directed to the Gatton Academy was decreased by 2% ($75,000 ). Full funding was provided for the Kentucky Mesonet at $750,000 in each year of the budget. The legislature did not include any funding for capital projects and did not fund the asset preservation matching pool as was proposed by the Governor. The bill also contains language relating to the dismissal of tenured faculty as it relates to elimination of academic programs for financial reasons. We view the language as permissive, and the University has been clear in our statements on this measure that WKU will follow AAUP guidelines related to tenured faculty in the event that academic programs are closed.
You can view the bill here.
In the corresponding revenue bill, HB366, the Free Conference Committee Report includes sweeping tax reform. The state income tax will go to a flat 5% and sales tax will be imposed on certain services not previously taxed. The bill raises the tobacco tax from $0.60 to $1.10 per pack of cigarettes and lowers the threshold of taxable pension income from $41,000 to $31,000. The bill mimics the federal tax reform passed in 2017. The Free Conference Committee Report eliminates the 5.1% penalty payment universities are required to make to KTRS employees who elect to go into our optional retirement program. This is a high priority for WKU and would result in significant savings. You can view the bill here.
SB151 was amended to include many of the provisions in SB1, the pension reform bill. Pension reform will place all newly hired KERS employees as of July 1, 2019, into a hybrid cash balance plan or would allow employees to elect into a 401(a) money purchase plan. Employees that began service prior to September 1, 2008, and who retire on or after July 1, 2023, will not be able to use sick time to determine retirement benefits.
The bill makes several changes to KTRS as well. Universities that participate in KTRS will see employer contribution rates double by 2020. All newly-hired KTRS employees will be placed in a hybrid cash balance plan, and employees with five years or less of service may elect to opt into the hybrid cash balance plan. We are still reviewing the bill to determine the affect on university employees and the financial impact. We will provide a more detailed overview in the coming days. You can view the bill here.
HB362 was amended to include many of the provisions from SB66. Universities participating in KERS will have the option to leave the system, and opting to do so would trigger the employer contribution rate to be frozen at the current level. Under these provisions, employees’ pension benefits would freeze and would no longer accumulate going forward, and all employees would be moved into an optional retirement plan. Although the bill provides this mechanism to transition out of KERS, the University has much to understand and study before any decisions are made. More information will be forthcoming and there will be ample discussion with the campus as University officials review the all the implications of exercising this option. You can view the bill here.
HB592 is an omnibus statutory relief bill for public universities. This bill addresses various statutes, which, if amended, would provide needed financial and administrative relief to the universities. The bill passed the House on consent and was amended in the Senate Education committee. The full Senate passed the bill on consent last night and the bill is on the House calendar for concurrence when they return on April 13 and 14. You can view the bill here.
SB130 aligns the campus crime reporting requirements in the Minger and Clery Acts. The bill has been signed by the Governor. You can view the bill here.
The legislature adjourned last night until Friday, April 13, for the ten-day veto period. When the legislature returns on April 13, they will have the final two days of session and will adjourn Sine Die on Saturday, April 14, until January 2019.
The complete bill tracking report is available here.