Kentucky Gov. Signs Controversial Pension Bill, Immediate Lawsuit Follows

Teachers union organizes Friday walkout for members.

Republican Gov. Matt Bevin signed Kentucky’s controversial pension reform bill into law Tuesday, which makes future teachers pony up for their retirement plan, prompting Democratic state Attorney General Andy Beshear to move to overturn the measure in court. The plan is 56.4% funded, with $32.8 billion in liabilities, according to the June 30, 2017 acturarial valuation.  

“Today I have fulfilled my promise and filed suit against the pension bill,” Beshear said in a Wednesday video via his social media accounts.

Under the pension overhaul, teachers hired after Jan. 1, 2019, will be moved into a hybrid cash-balance plan instead of a traditional defined benefits plan. The new law will also require teachers to work longer before they are eligible for retirement and will also put limitations on how many sick days can be counted toward their retirements.

For teachers, there is at least one silver lining in the fact that there are no changes to the annual cost of living adjustments, which were to be cut in half, from 1.5% to 0.75% under a previous version of the bill, which Beshear also opposed.

The 49-page lawsuit seeks to get the bill thrown out completely, claiming that it violates the state constitution and objecting to the way it was passed in the legislature, which is Republican controlled. Lawmakers attached the reform to a sewage bill at the last minute without any actuarial analysis or hearings.

The Kentucky Education Association, the teachers’ union, joined the lawsuit, which alleges that there are “multiple breaches of the inviolable contract

“We today have filed a very strong lawsuit along with a motion for a temporary injunction to prevent this bill from becoming law…to prevent any of the cuts it seeks to make from happening until we can get a full hearing, at which point we believe a court will side with us,” Beshear said.

Bevin’s signing the pension overhaul comes right after he vetoed the state budget and tax reform bills, a move legislators called “misguided.” The governor said in his veto announcement that the pension bill is unable to do enough, by itself, to solve the Bluegrass State’s $40 billion-plus deficit. Bevin called the pension overhaul legislation “a very good bill” in an interview with WHAS radio.

KEA president Stephanie Winkler is urging its members to protest against the pension revamp at the state capitol on Friday. CNN reports that Trimble County Public Schools has announced school closures so teachers and staff can make their voices heard in Frankfort, the state’s capital.

The GOP governor labeled the attorney general loose with the public purse. Bevins’ communications director, Elizabeth Kuhn, told the Courier Journal that the attorney general and his father Steve — also a Democrat and the previous governor (2007 to 2015) as well as an attorney general from 1980 to 1983 — have “always treated pensions as political currency.”

“It’s no surprise that Attorney General Beshear filed this political lawsuit today,” Kuhn said.