As the figures above demonstrate, additional funds are needed for the Commonwealth of Kentucky to fully meet the federal matching requirement for KSU's land-grant program during the 2018-20 biennium. Under conditions of the grants, the university is authorized to receive and expend federal funds to support land-grant program activities and services, provided those funds are either matched by the state, or KSU receives a waiver absolving it of that requirement. In recent years, the university has requested and received waivers, but there is no guarantee that waivers will continue to be granted going forward.
The Council on Postsecondary Education recommends appropriations of $290,000 in 2018-19 and $290,000 in 2019-20 to provide a sufficient amount of recurring state funds to meet federal match requirements for Kentucky State University's land grant program.
If the requested funding is authorized, all of these funds will be allocated to Kentucky State University and will be used to help sustain the effectiveness and impact of outreach, service, and applied research at KSU's land-grant program.
In September 2017, information from the Kentucky Retirement System (KRS), indicated that the employer contribution rate for Kentucky Employees Retirement System (KERS) personnel in non-hazardous positions is expected to increase from 49.47% in 2017-18 to 84.06% in 2018-19. The contribution rate for personnel in hazardous positions will increase from 23.70% to 41.12%.
In October, CPE staff obtained KERS projections, by way of Office of State Budget Director (OSBD) staff, showing the estimated impact of rising contribution rates on postsecondary institution pension payments. Specifically, between fiscal years 2017-18 and 2018-19, employer-paid retirement contributions at Kentucky comprehensive universities and KCTCS institutions are projected to increase in the aggregate by $47.2 million, or about 70 percent.
If the requested KERS increase funding is authorized, it will fund increased pension costs at the institutions. These funds will be excluded from the new postsecondary education funding model.
Kentucky State University is requesting $1,358,539 in additional General Fund support in FY 2018-2019 and $1,358,539 in FY 2019-2020.
Absent requested funding, cost increases associated with escalating KERS contribution rates are the equivalent, on average, of about a 9.7 percent budget cut for postsecondary institutions with participating KERS employees. An unfunded mandate of this magnitude will strain campus budgets and could result in higher tuition and fee charges. For this reason, the Council and institutions strongly support any funding the
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