An open letter to Kentucky Legislators,

I write this letter on behalf of all of the employees of the Pennyrile District Health
Department, the local tax payers and residents of Caldwell, Crittenden, Livingston,
Lyon, and Trigg Counties and for all concerned citizens of Kentucky. We need your
help in understanding the risks to public health in Kentucky if you, our elected
representatives, do not understand the effects of increasing the pension requirement on
local health departments and budgetary cuts to public health programs. I hope this
letter will describe the situation in our five rural counties that make up our public health
district.
The first point you must understand is that local health departments are neither
truly state nor truly local agencies. We are what can be described as quasi-state
organizations, required by statutes and regulations to exist with local counties to form
boards of health and local departments of health. As approved, individual counties may
come together and form districts in order to facilitate the effectiveness of public health
programs. Statute also mandates the Cabinet for Health Services to establish policies
and standards of operation for the local health departments of Kentucky. Certain
restrictions are further emplaced on these local health departments such as the
requirement to participate in the Kentucky Retirement System (KRS 61.5220).
I would like to discuss the pension funding issue first, as this area has the
greatest single impact on the health department budget planning. Last fall the state
budget office informed the entire state of what would be required to fully fund the
pension systems by department and agency. One of the greatest impacted agencies
was the local health departments. Local health departments have been paying
approximately 48% for employee retirement benefits, of which approximately 22% of
this was offset by DPH allocating funds to our departments for assistance in paying this
obligation. For the 46 employee that make up the Pennyrile District Health Department
this was approximately $861,000 of our annual budget. If the revised assumption from
the Budget Office for 2019 increases this rate to 84.06%, we will be required to pay just
over 1.5 million dollars into the state pension system, a 69.92% increase.
In a recent article a legislator from Taylor Mill made the following statement:
“We’ve done our best to protect them over the last couple budget cycles, but our
number one obligation is to fully fund the pensions for our (state government)
employees, not other people’s employees” Sen. Chris McDaniel https://www.courier-
journal.com/story/news/politics/2018/01/29/kentucky-pension-reform-mental-health-
centers-layoffs/1064743001/ . We in the local PDHD applaud the fact that Sen.
McDaniel wants to fully fund the state government employees, but as local health
departments we should be viewed in the same category, as the state statutes have
mandated our participation.
 Local boards of health and taxing districts help fund local health department
operations, both individual county facilities and district operations, through property
taxes. For this year this amount was budgeted at $855, 483. It is these funds, added to
the allocations from the State Department of Public Health, that provide the majority of
public health services to our local communities. In FY 18 the Pennyrile District Health
Department was allocated $987,987 from the DPH for budget planning purposes. A
large part of these allocations are restricted for certain programs and only provided as
true revenue if the service is performed by our clinicians. From this amount, $390,112,
is also restricted to assist our funding of KERS, as mentioned above. Additionally we
were allocated $633,504 from federal funds through the state DPH. These three
sources of funding make up just under $2.5 million dollars of our budgeted revenue,
however we all recognize that we will never be able to pull $100% of our allocations due
to the restricted nature of the funding sources.
Therefore the shortfall in funding revenue is made up in two subsequent areas.
This first is private insurance and services fees. For FY 2018 we budgeted this to be
just over $1 million in revenue, however this does not take into account budgeted
expense that we pay back to the state for all Medicaid clients. Local health departments
are required to pay anywhere from 10-30% of Medicaid payments back to the
Department of Public Health, a program known as Medicaid Match. This is not a
requirement for private practices or hospitals. As the majority of our clients receive
Medicaid insurance, this is estimated to be approximately $111,000 this fiscal year.
The second area of funding to zero balance our budget is our unrestricted
reserve, or local bank account. The majority of this account is made up from previous
year’s local tax dollars and settlements that were not spent. For the last several years
the PDHD has been required to commit between $250,000 and $500,000 just to make
our planned budget balance. These funds are for emergencies and unexpected events,
however each year we end up having to commit a portion of them to close out our
budget.
For the last several months our LHDs have been hearing from the DPH
Commissioners Office that we could expect to see cuts to the FY 2019 allocations.
Following the budget presentation by the Governor we were informed that we would
likely face a 6.25% cut in state allocated funds. We have also been informed that the
DPH may no longer be able to allocate any funds for the LHD payment into KERS. If
both of these assumptions happen, the PDHD could see a loss of nearly $428,000 in
revenue. When combined with a worst case scenario of paying the full $84.06 percent
into KERS, the PDHD will see a cumulative loss of just over $1 million dollars. This loss
will be transferred to the local health department reserve funds, of which the PDHD
could only sustain for 1.5 years.
Legislators, I ask of you to come visit your local county clinic and district health
office. Come in and learn what programs the local and federal laws mandate for us to
perform and understand how these in addition to core public health services are greater
than what the local taxpayer in rural west Kentucky can afford to fund on their own.
Please talk with us as you are discussing what the state budget will be, and please let
us help in informing the solution to creating a healthy Kentucky. We cannot move from
being one of the Top 3 unhealthiest states in the nation if we do not fund the public
health programs that help in educating our citizens and preventing illnesses.

Getting the Public Into Public Health,

Charles Hiter, Director Pennyrile District Health Department