Kentucky Health Departments Eye Cutbacks As Pension Costs Skyrocket

Apr 13, 2018

Sarah Ramey (left) visits with Nancy Wingert and her 21-month-old son, Emery in Grayson, Kentucky in 2017. Ramey works for the HANDS program, which could be cut as health departments face rising pension costs.
Credit Lisa Gillespie

Kentucky’s local health departments are facing massive increases in pension costs starting in July. And this, many of them say, could cause them to have to lay off employees, cut back or even close public health programs as a result.

“This is a watershed moment for public health, it’s a tipping point, where we need to assess how we do business and look at every aspect of operations in local health departments and what can we do differently,” said Scott Lockard, the director of the Kentucky River District Health Department, which covers several eastern Kentucky counties.


Last year, the board that manages the Kentucky Retirement System made a prediction that pension investments wouldn’t raise enough money. So government employers – which include local health departments – have to kick in more money to keep the system going.

And this means county health departments across Kentucky will owe cumulatively $38 million to the state retirement system in July. Health departments will each have to pick up part of this tab. And they aren’t the only agencies facing these potential increases: other local government agencies are in the same boat, but they have the prospect of relief under a bill that passed the General Assembly to allow them to phase in the costs. Governor Matt Bevin vetoed that bill recently, but lawmakers are poised to override that veto.

But health departments aren’t currently included in that legislation.

And Lockard said the result for his department will mean differentiating between the services they’re legally required to provide — like health inspections in grocery stores and restaurants, on-site sanitation for residents that don’t have city or county waste services, and tracking of diseases — and those they aren’t.

What Will Be Cut?

The Kentucky Health Departments Association estimates that health departments across the state will have to lay off a third of their employees in the next two years. Christie Green of the Cumberland Valley Health Department said she notified her 102 employees last week that nearly half of them would be laid off.

Of the $38 million Kentucky’s health departments owe by July, Cumberland Valley — which covers three counties in eastern Kentucky — must pay $1.2 million to the Kentucky Retirement System.

“We’ll be cutting public home health, and we’ll be cutting in public health clinics,” Green said. “That includes our clinic nurses that do direct patient care and community-based public health.”

Green also will lay off Health Access Nurturing Development Services — or HANDS — workers. It’s a state-wide program where new parents get a weekly hour-long session with a family support worker who helps parents with best practices.

Georgia Heise, the director of the Three Rivers District Health Department covering four northern Kentucky counties, said she’s hopeful she won’t have to cut HANDS.  Her department will have to pay $1 million to the pension system in July.

“We have a population of just 50,000 people, and our counties are very poor,” Heise said. “We have a lot of people that benefit from that program, especially when we have people struggling with addiction and are also trying to maintain custody of their child. In the best-case scenario we can get in there early and prevent some bad situations.”

But Heise will have to close the home health agency the department runs.  It serves around 100 people, who are mostly elderly or have disabilities.

“We do have patients that really want our health department to do these services, because they know our employees and we have had patients that no one really wants,” Heise said. “It’ll probably be hard for us to find a for-profit agency that could take on some of our patients.”

Where Will The Money Come From?

Other than cutting programs, local health departments are able to ask their governing boards of health to raise property taxes. But in economically depressed areas, that’s not a cure-all. Scott Lockard with the Kentucky River Health District said in some places, an increase in taxes still won’t cover the payment shortfall.

“We have health departments that have a more substantial line of funding due to being in an area where higher property values are booming,” Lockard said. “Then we have health departments that have the biggest need that have low property values, and that presents a much bigger challenge for them.”

Kathy Neal, the director of the Powell County Health Department — the smallest health department in Kentucky — isn’t sure how the $90,000 she owes will get paid come July. She already only has five full-time employees. And she’s not sure if raising property taxes would even amount to what they owe.

“We don’t have a hospital. We don’t have industry. We don’t have the property values. So I’m not sure what our board will do,” Neal said.

A Way Out?

Last week, Gov. Matt Bevin vetoed a bill that would phase-in the pension payments for local governments and agencies. And lawmakers have a chance to override that veto during the final two days of this year’s legislative session, on Friday and Saturday.

Local health departments weren’t included in the bill, but there’s a chance lawmakers could add them if they override Bevin’s veto. That, health department directors say, would make their payments more reasonable. For Lockard, it’s the difference of owing $250,000 in July, instead of $1.5 million.