KERS Impact

The Kentucky Department of Public Health predicts that if changes are not made, the health departments in the counties depicted in red and yellow could become financially insolvent within the next two years.

The Kentucky Department of Public Health listed the Floyd County Health Department among 64 health departments that could close because of financial strains within the next two years.

Floyd County Health Department Director Thursa Sloan said, however, that the financial shortfall in Floyd County “isn’t as crippling” as it will be elsewhere because her team has been planning, saving and phasing in cutbacks for years.

According to information published this week by Kentucky Health News, Kentucky Public Health Commissioner Dr. Jeffrey Howard is asking health departments to “drastically cut services” to ensure the “survival of public health in the state.” 

The agency reported that 42 health departments — including those in Pike, Perry, Knott, Letcher and other counties — are in danger of closing within the next year, and another 22 health departments — including those in Floyd and Lawrence counties — are in danger of closing within the 13 to 24 months. 

In January, Howard announced his plan to address the funding shortfall, calling it an “opportunity to transform” the public health system. His plan calls for health departments to “simply, focus and prioritize,” so that they only provide services in core areas and to reevaluate services that are also offered elsewhere.

“We’ve been an inch deep and a mile wide for three-plus decades,” Howard said,  “and we’ve got an inch deep and a mile wide worth of results.”  

He explained that the funding shortfalls for health departments come for two reasons: the enactment of the Affordable Care Act and the state pension crisis.

“These are the driving factors. These are the burning platform that require us to change. If not, we will not have a public health system five years from now. You will not have a local health department if we don’t make drastic and serious changes,” Howard told health department directors across the state in January. 

Sloan said the Affordable Care Act caused revenue declines at health departments because low income patients who used to rely on health departments can now be served by private healthcare providers. 

In addition to funding declines caused for that reason, on July 1, health departments may be forced to increase the amount they pay for employee pensions from 49.47 percent of the department’s payroll to 83.43 percent. That pension issue will put public health in a $40 million deficient, Howard reported. 

Sloan said Floyd County Health Department’s pension obligation would increase from approximately $400,000 to $800,000 if the state does not grant a reprieve that gives health departments one more year to transition into the higher cost-share on employee pensions.

She is not, however, overly concerned about an eventual closure in Floyd County, as suggested by state officials. 

“The bottom line is we will be able, for a while, to deal with the increase,” Sloan said, talking about the increased pension costs. “That huge increase will cause health departments, mental health agencies, all of those other quasi-governments, it will cause some issues in their budgets.”

She explained that because health departments will be required to pay more for pensions, the cost of services will exceed the amount of reimbursements health departments receive for providing those services. Because of that lag in funding, some health departments will increase tax rates, but Sloan said that will not happen anytime soon in Floyd County. 

“We currently have enough tax money to cover our needs,” Sloan said. “And so, we wouldn’t be reaching out in any kind of immediate timeframe to ask to raise taxes. So, the bottom line is, we save our money.” 

Sloan said the health department’s budget, which is maintained separately from the taxing district budget, is around $4.2 million and she expects it to decrease to $3.4 million when it is approved later this month. 

The department’s taxing district plans to carry more than $8.4 million forward from its current budget into its new budget, according to reports filed with the Kentucky Department for Local Government. 

Sloan said the health department has been preparing for a funding shortfall for several years.

“This has been coming for a while to health departments,” Sloan said. 

She said state and federal grant funding has declined by $360,000 at the health department since 2012, and the department has also lost $200,000 in tax funding over the last two or three years. 

“It was called strategic planning,” Sloan said, when asked how the department dealt with the revenue losses. “My salaries this year just happen to be almost $200,000 less than they were last year.” 

She said that in 2012, the health department had 45 full time employees, and since that time, officials have not replaced employees who retired and/or changed former full time positions to part time to reduce pension costs. The department cross-trained employees and currently has 30 full time employees and eight part time employees, Sloan said. 

She hopes the state will grant a one-year reprieve to delay the pension cost increase. She also stated, “But if they don’t, we’re ready. We won’t change anything this year. We won’t be changing any services.”

She explained that the health department will “use this as our transition year,” and start evaluating services offered there that may be offered by other agencies. 

“If we get another year, our plan is to not reduce services, but to stop doing the things that other people can do more cost efficient than we can that the law says we don’t have to do anyway,” Sloan said. “We have to get real. We do. We can’t have everything. This is not a day when we can be everything to everybody.” 

The health department renewed its lease for the Wheelwright City Gym this year, with plans to expand its HEART program for mothers with substance abuse issues. Sloan said that lease is continuing but the opening of that program has been delayed because only one person had been referred to attend in Wheelwright. The department will launch its mobile needle exchange program this year, and it is planning to move its Betsy Layne to a new location this year. 

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