Kentucky Left to Try, Try Again on Pension Overhaul

State senator, the running mate of GOP Gov. Bevin, vows to come up with an alternative to bill Bevin vetoed.

Kentucky’s 2019 legislative session came up short in its bid to enact a long-overdue pension reform because the governor vetoed it a couple of weeks ago. But an ally of Republican Gov. Matt Bevin is crafting another version.

“We’re looking at trying to make sure that we have something that’s going to make actuarial sense,” said Sen. Ralph Alvarado, who is Bevin’s running mate this year as the governor seeks another term. Alvarado told that he wants something that will “take care of those who are already retired” and guarantee they keep their benefits.

Bevin has called a special session of the legislature to deal with this issue on July 1, the start of Kentucky’s new fiscal year. Alvarado wants to get a general consensus on the new pension bill, in hopes the measure will have a smoother path next time.

The senator kept a tight lid on details, but thinks universities will like it because it protects their buyout options. “It might be a little bit different of a structure,” he said. He also wants to protect the state’s risk while it provides for its current retirees and creates a new structure for new hires.

Bevin vetoed the version that the GOP-controlled General Assembly passed, citing fiscal concerns. The move by lawmakers would have given the state’s 118 quasi-governmental agencies, which include regional universities and health centers, permission to leave the pension system and dodge cost increases. Bevin objected by saying the departures would ultimately hurt Kentucky’s finances, losing $800 million.

Considering Kentucky is already $37 billion deep in pension debt, another near-billion wouldn’t be doing it any favors.

Had it passed, the exiting agencies would have been able to create their own retirement plans, but with a catch: If pension payouts were 30 days late, the state could then take over and restructure however it saw fit. Employees hired from 2014 on would also see reduced benefits.

One complication: On July 1, the agencies’ contribution rates to the state fund will change from roughly 49% of an employees’ salary to about 84%. Bevin did that last year, also, but it was nixed by lawmakers less than 24 hours after it started. Nothing was passed.

Alavarado said there is a “bit of a time crunch” to call the session as lawmakers prep for summer plans, but he thinks the legislature will pull something together.

The senator could not be reached for original comment. Bevin was unable to be reached for comment.


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