Kentucky Lawmakers Return to Tackle Retirement System Mess

Pension reform, stymied in court, is on the top of the lawmakers’ agenda.

As the Kentucky legislative session begins Tuesday, state pension reform is once again at the top of the agenda.

In 2018, the state Supreme Court unanimously struck down legislation passed by the General Assembly on the grounds that the way the bill was enacted was illegal.

This was the second time the pension reforms, which were to change the retirement benefits of new teachers and cut the number of accrued sick days used toward retirement, were cancelled by the courts last year.

Initially, the lower-level Circuit Court had negated the bill, but was challenged by Gov. Matt Bevin. He had set the measure in motion when he tucked the legislation into a sewage bill at the legislative session’s 11th hour. The changes were then fought by Attorney General Andy Beshear, who won both cases. Beshear is running for governor this year, against Bevin, who seeks another term.

“Any legislation must comply with the Kentucky Constitution and should result from an open and transparent process that includes all stakeholders,” Beshear told CIO in an emailed statement. “It is time for the Kentucky General Assembly to pass legislation expanding gaming and dedicate 100 percent of the revenue to our public pension systems.”

Despite last year’s setbacks, Bevin insists something can be done about the state’s $40 billion pension hole, and members of the legislature agree that it is a pressing issue.

“It’s well documented that we have somewhere around a $40 billion unfunded liability in the pension systems,” Senate President Robert Stivers told the Northern Kentucky Tribune. “We’re going to have to address that, and funding can’t be the only solution.”

Stivers added that actuarial analyses will suggest that “maybe only 20% of the problem is funding,” but even without that 20%, there is still a $32 billion issue due to “structural problems with the systems.”

Senate Majority Leader Daymon Thayer said he thinks there are enough state senators willing to pass “significant pension reform.”

“Our members in the Senate understand that this is a crisis and that we have to take some significant steps,” he said in an interview with news outlet

Kentucky’s pension plan is 31% funded.

However, changes to the retirement systems are not the highest priority on state lawmakers’ agenda. They place a high priority on getting a school safety bill passed. This is in response to the Marshall County High School shooting last January, which saw the death of two students and the wounding of 19 others.

A bipartisan task force has been studying the school safety problem since June.

Governor Bevin could not be reached for comment.

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