1. A QUILA G ROUP OF F UNDS ® Update on the Kentucky Economy Dr. James R. Ramsey April 23, 2010

2. A QUILA G ROUP OF F UNDS ® Honored to serve as a Trustee of the Churchill Tax-Free Fund of Kentucky since its inception in 1987 (I was 12 at the time!) 2

3. A QUILA G ROUP OF F UNDS ® Since we last met, it’s been another crummy economic year… …but things seem to be getting better. 3

4. A QUILA G ROUP OF F UNDS ® We know that nationally times have been unprecedented… Sources: NBER, BEA, and BLS. * Lowest level during the current recession. The next two quarters (2009: III and IV) have been positive. 4 PeakDecline in real GDP Dec-07 (IV)-3.70% Mar-01 (I)0.40% Jul-90 (III)-1.40% Jul-81 (III)-2.90% Jan-80 (I)-2.20% Nov-73 (IV)-3.20% Dec-69 ((IV)-0.20% Apr-60 (II)-1.10% Aug-57 (III)-3.70% Jul-53 (II)-2.60% Nov-48 (IV)-1.70%

5. A QUILA G ROUP OF F UNDS ® National Non-Farm Employment 5

6. A QUILA G ROUP OF F UNDS ® In Kentucky, it wasn’t much better… 6

7. A QUILA G ROUP OF F UNDS ® Kentucky Employment Collapse (Nonfarm employment in thousands) 7

8. A QUILA G ROUP OF F UNDS ® 8 If there is any good news for Kentucky Joblessness across America

9. A QUILA G ROUP OF F UNDS ® Loss of Manufacturing Jobs in KY Continues to be a Major Concern 9

10. A QUILA G ROUP OF F UNDS ® Have we hit bottom? How long will it take to regain over 100,000 lost jobs? –Where will new jobs come from? Healthcare Logistics Business Services Energy Impact on state budget – state services –Assuming we have a budget! Concerns for Kentucky April 2010 10

11. A QUILA G ROUP OF F UNDS ® Medicaid Corrections Public employee benefits So we will face state budget problems for a while (at least for four or five years) Adding to the state budget problem, we have the “Leaky Bucket” 11

12. A QUILA G ROUP OF F UNDS ® Spending Priorities 12

13. A QUILA G ROUP OF F UNDS ® Slow / very slow recovery in Kentucky 2015 before we see as many jobs in Kentucky as we had in 2007 (Normally I am more optimistic and my forecasting record is suspect – I thought we were going to be better in basketball this year) Forecasting / Guessing The Future 13