The Kentucky State Treasurer’s office has launched an initiative to enable those with disabilities to save and invest money without putting their state or federal benefits at risk.
Plus earnings made on STABLE Kentucky accounts are not subject to federal income taxes.
Treasurer Allison Ball explained the initiative on KET’s Connections. She also discussed her office’s unclaimed property program and her views on tax and pension reform.
How STABLE Works
Under old guidelines, individuals with disabilities could only save $2,000 a year without jeopardizing their public benefits like Medicaid or Supplemental Security Income. Ball says that made it very difficult for the disabled to save money for their futures or to pay for unexpected expenses like car repairs.
That changed in 2014 when Congress passed the federal Achieving a Better Life Experience (“ABLE”) Act to give those individuals greater flexibility to save and invest money. Ball launched STABLE Kentucky in December in partnership with the Office of Ohio Treasurer, which was the first state in the nation to create such a program.
“As a bankruptcy attorney I helped lots of people that had financial issues because of their disabilities and I learned that you really can’t be financially sound unless you can save and invest,” Ball says.
STABLE Kentucky accounts are like regular bank accounts, where participants can make deposits and withdrawals, and can invest for long-term earnings through several Vanguard LifeStrategy Funds options. Account holders can contribute up to $14,000 a year to their savings.
“It’s not just you that can save and invest, your family members [and] your friends can also contribute to your account,” says Ball.
Under current Kentucky law it’s unclear whether the STABLE moneys are subject to state taxes, so Ball says she and her staff are promoting legislation to ensure that the accounts will be tax free at the state level as well.
The State’s Lost and Found
The treasurer’s office also administers the Kentucky Unclaimed Property Fund. Think of it as the state’s lost-and-found collection of orphaned safe deposit boxes, security deposits, insurance policies, and other moneys that were never collected by the rightful owner. Individuals can search the Treasurer’s website to see if there are items that they are entitled to claim.
“When I got in office, we were about three months behind in returning claims,” says the treasurer. “We decided we needed to get a handle on this… so we did a two-week blitz of getting it under control and we’re caught up.”
In the process, Ball and her staff have returned $25 million worth of unclaimed property, which she says is a new record for the treasurer’s office. That money doesn’t just go to individuals. She says they’ve returned funds that were owed to local school districts as well.
Policy Initiatives
In addition to making STABLE accounts free from Kentucky taxes, Ball says she’s also promoting legislation to make so-called 529 accounts for saving toward college tuition costs more tax friendly for individuals. The treasurer says she’s looking forward to participating in the overall debate about tax reform during the special legislative session that’s expected later this year.
“We need to be looking at things that spur the economy, that help businesses, that help the middle class – that needs to be where the focus is,” Ball says. “There are little tweaks and there are big tweaks that we can make that will help those areas.”
Her office is also advocating for reforms in the state’s public pension plans.
“I’m a big fan of transparency,” says Ball. “You really can’t make good financial decisions unless you know where money is going.”
Last summer Ball sued to prevent Kentucky Retirement Systems funds from being used to hire outside counsel to defend former KRS Board of Trustees Chair Tommy Elliott. Gov. Matt Bevin ousted Elliott in a reorganization of that board, and Ball contends pension funds cannot be used to defend a former trustee.
The treasurer supported a state law passed in January that makes data about legislators’ pension benefits available to the public. Ball is also a board member for the Kentucky Teachers’ Retirement System, which along with the public employees pension plan faces an estimated $33 billion in unfunded liabilities. Ball says KTRS may have to change some of the benefits it offers to retirees such as scaling back health coverage.
“I think that we do need to be grown-ups about looking at the structure [of KTRS benefits] and [whether] this structure something that can be continued for the future,” the treasurer says.
A Youthful GOP
Elected in 2015, Ball holds the distinction of being the youngest statewide female elected official in the country. The 35-year old joins state Agriculture Commissioner Ryan Quarles (33 years old) and state House Majority Floor Leader Jonathan Shell (29 years old) as the young faces of the Kentucky Republican Party.
Ball credits state GOP officials for cultivating younger Kentuckians for leadership positions. She says millennials aren’t always partisan, but she believes they are pragmatic individuals who want limited government, self-determination, and wise use of tax dollars.
With Republicans now dominating Frankfort, Ball says that proves that voters like the direction the GOP is taking state government. She gives significant credit to Gov. Bevin, who she says is doing a great job focusing on Kentucky’s finances.
“One of the great tests [of] a person who runs for office and then gets that office is, are they doing what they said they would do when they were running?” Ball says. “Gov. Bevin is doing what he said he would do when he ran… That’s about as commendable as you can be because that shows you have integrity and you have a backbone.”
