Kentucky’s city administrators claim that with House Bill 369 they can now see the light at the end of the tunnel. For the past 20 years, municipal cemeteries in the Blue Grass State have been forced to operate under the same rules that apply to commercial cemeteries when it came to perpetual care funding. For that period, some municipalities built up some sizeable PC trusts. But as tax revenues declined over the past few years, those PC trusts became enticing to city administrators looking for ways to cover mounting cemetery expenses. These municipalities are telling the Kentucky legislature that not only should they be allowed to tap these funds for cemetery improvements, but that their cemeteries should be exempt from perpetual care requirements. The first objective makes sense, but the second does not.
Generally, state perpetual care laws restrict what the trust can invest in, and limit distributions to interest and dividends. These laws seek to impose conservative standards that will ensure the longevity of the fund. However, these restrictions also handcuff cemetery operators that must plan for the long term when facing capital improvements such as streets, lights and drainage. When the circumstances warrant improvements, cemetery operators and trustees should be afforded a mechanism to seek extraordinary distributions. HB 269 provides municipal cemeteries that mechanism. However the bill does not address the needs of other cemeteries, or to provide trustees the latitude to diversify trust investments so as to better fund projected improvement needs.
HB 269 also takes a wrong turn when it comes to exempting municipalities from Kentucky’s perpetual care requirements. If municipalities do not require perpetual care fund contributions, the expense of cemetery maintenance will eventually be borne by taxpayers. Cemetery corporations understand perfectly the problems municipalities are having with revenues and expenses. Cemetery corporations have been forced to raise the price of burial spaces, expand the sale of merchandise and to become more proactive with preneed. It is no secret that the cost of a municipal grave space lags far beyond that charged by a corporate cemetery. Rather than avoid the discipline required by a properly funded endowed care fund, municipalities need to consider the revenue side of the equation. A recent American Cemetery article suggests that municipal cemeteries need to adopt the preneed business strategies of corporate cemeteries. I don’t think that advice is practical, but municipalities do need to explore options other than their taxpayer base. For those of us who choose cremation, or who purchase a burial space at a corporate cemetery, why should our taxes subsidize a municipal cemetery?
About a year ago, a funeral director wrote to the Funeral Monitor to complain that corporate cemeteries are driving up the costs of burials. In support of his complaint, the funeral director made a price comparison between the burial spaces at corporate cemeteries and those at the municipal cemetery. As demonstrated by the Kentucky legislation and the comments of municipal administrators, these comparisons are not of apples to apples. Using distorted facts to blame a competitor for the rising cost of funerals and burial does a disservice to the entire death care industry.
It has been almost 18 years since I drafted my first perpetual care bill. That initial effort took the tack of required disclosures about perpetual care funding, but allowed certain types of cemeteries to opt out of perpetual care. Today, I think perpetual care funding should be required of all cemeteries.