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KPPA staff outlines FY2027 draft administrative budget, reports $10.65 billion fiduciary position
Summary
Staff told trustees the KPPA FY2027 administrative appropriation from House Bill 500 is $49.8 million, leaving a roughly $1.4 million shortfall against requested needs; finance staff reported KRS fiduciary net position of $10.651 billion (up about $1.4 billion year‑over‑year) and flagged $8.3 million of past‑due employer invoices, most related to Kentucky River Community Care.
KPPA staff presented the draft fiscal‑year‑2027 administrative budget and the quarterly financial report during the board’s June 16 meeting, explaining how a House Bill 500 appropriation differs from the agency’s biennium request and identifying actions staff will take to balance the appropriation.
KPPA finance staff reported that House Bill 500 provided $49.8 million for KPPA administrative funding, while the agency had requested $50.8 million. Staff said that, based on current calculations, KPPA needs approximately $51.2 million to cover projected FY27 costs and therefore must reduce about $1.4 million from planned spending; staff proposed trimming personnel costs by about $945,000 and managing other line items to absorb the remainder.
Finance director Mike summarized the system’s fiscal performance: "The total fiduciary net position for the KRS system is at $10,651,000,000, and that's up 14.8% or 1,400,000,000 from the 9,200,000,000 prior year, March 31 amount," he said, citing net investment income and increased employer and member contributions as drivers of the improvement.
Staff also flagged nearly $8.3 million in past‑due invoices at March 31; about $6.7 million of that balance was tied to Kentucky River Community Care, which KPPA continues to bill monthly and for which legal action is ongoing. Staff said some large past‑due dollars are being worked by KPPA legal and that a smaller portion is handled by the IRSI team.
Board members asked clarifying questions about legal budgets, cash flows within individual plans (nonhazardous, hazardous, state police), and how Humana’s benefit trends might affect insurance plan outflows. Staff said KERS hazardous cash flow remained negative in the period reported and that some insurance plans show modest negative net contributions when removing investment income.
Staff said the FY2027 KPPA administrative budget will be presented to the KPPA board on June 25 for final approval and that the board would receive additional reporting as the fiscal year progresses.
