Health departments and community mental health centers warn of reduced services due to huge pension costs and budget cuts

Huge increases in pension costs and state budget cuts have mental-health and public-health agencies warning of significant reductions in their services beginning this summer, the Courier Journal reports.

Tom Loftus reports that 11 of the state's 14 community mental health centers and all public health departments are among the "quasi-governmental entities" whose employees are members of a pension plan "considered the worst-funded in America."

These groups learned last year that their required contributions for employee pensions "would soar 69 percent for the fiscal year beginning July 1 -- from 49.5 percent of their annual payroll to 83.4 percent," Loftus writes. And instead of getting some relief in the next state budget as they had hoped, Gov. Matt Bevin's proposed budget calls for a 6.25 percent across-the-board cut.

“The increase in pension contribution cripples our organization and ability to sustain our services,” Paul Beatrice, chief executive of Bluegrass Community Mental Health Center in Lexington, told Loftus. He added that the mental health centers “serve the most vulnerable Kentuckians — individuals with intellectual and developmental disability, mental illness, and addiction.”

874K rally at the state Capitol  (KHN photo by Melissa Patrick)
At least 1,000 More than 800 advocates for Kentuckians with mental and physical disabilities gathered at the Capitol Jan. 31 at the 18th annual 874K rally to bring attention to the estimated 874,000 people in the state who use services that could be on the chopping block if the agencies find no pension relief. They yelled at the end of the rally, "Boo the budget!"

"The investment in people is not there" in the budget, Advocacy Action Network Executive Director Sheila Schuster, who led the rally, said in an interview. "I don't see the investment in the safety-net services." And the pension costs that have been added to these quasi-governmental agencies is "simply not sustainable," she said, adding later, "They are going to close programs; they are going to lay off staff."

On top of that, Schuster noted that this is the first year since 2000 that the state has not increased the number of waivers that allow more people with physical and mental-health issues to live in the community rather than in institutions. There are 8,731 Kentuckians on waiting list for what are officially called 1915C Medicaid waivers, with 126 of them considered "urgent," according to Schuster.

Steve Shannon, executive director of the association of mental health centers, told Loftus that the community centers would see pension costs rise $29 million a year, to $72 million from $43 million, in addition to a $1.5 million cut if Bevin's budget is approved.

"The only recourse we have is to reduce payroll. And if you reduce payroll you close programs, maybe a clinic. People in that county would have to go someplace else for help,” Shannon said. “It’s all about less access to services.”

Allison Adams, president of the Kentucky Health Department Association, told Loftus that local health departments are looking at a $38.5 million increase in their pension costs. “There’s no other way to manage such a big new expense to local health departments than to reduce personnel, which ultimately reduces services at the county level,” she said.

Loftus reports that nine of the state’s domestic-violence shelters and 10 of its 13 rape-crisis centers, whose employees are part of the state pension plan, will also be hit with the added pension costs.

“This literally is going to put some shelters out of business,” said Sherry Currens, executive director of the Kentucky Coalition Against Domestic Violence. “We are already raising as much as we can and it’s hard to get donors to pay for retirement costs, so it’s money that we can’t come up with."

Bevin has said that his proposed budget cuts are necessary to fund the state's ailing pension system.

“The cost of fully funding teacher and state employee pensions placed severe pressure on every area of the budget," Bevin spokesman Woody Maglinger told Loftus. "There isn’t enough money to meet every need.”

Maglinger said of the quasi-governmental groups seeking relief, “These organizations should direct their efforts at advocating for meaningful pension reform that provides immediate savings in their budgets instead of asking for more taxpayers’ dollars to fund the status quo.”

House and Senate Republican leaders have been working on a revised pension reform bill for consideration in the current legislative session, but that bill has not yet been filed.

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