Substitute Kentucky Pension Bill to Be Introduced

Attorney General reveals letter citing 21 legal violations with bill hours before meeting.

Kentucky Senate Republicans announced before a rowdy group of concerned citizens that there will be an updated version of the pension reform bill they introduced last week with several major changes.

One of the top changes includes relaxing the 50% reduction of retired teachers cost-of-living adjustments (COLA) for 12 years. The new version will instead reduce teachers’ COLAs from 1.5% to 1% until the Teachers Retirement System is 90% funded, which an actuarial analysis of an earlier pension bill estimated would take 20 years.

Senate President Robert Stivers said the new version of Senate Bill 1 would also not reduce benefits lawmakers acquired from taking a post-retirement gig at another state job. However, it would stop future pension “supersizing.”

Another change in the substitute bill sees a 1% salary contribution going towards retirement health benefits for certain state workers hired between mid-2003 and mid-2008. The initial bill required a 3% contribution.

According to the Courier-Journal, the bill’s sponsor, Joe Bowen, told the disgruntled teachers and state government retirees that there will be no votes on the bill until the updated version is revealed along with an actuarial analysis.

“We were elected to solve big problems, and this plan unravels the biggest fiscal crisis Kentucky has ever faced,” Bowen said, reported by the Journal. “And there’s going to be some sacrifice involved at some level. Some sacrifice for all of us.”

However, two hours before the Wednesday meeting, Kentucky Attorney General Andy Beshear released a six-page letter to the legislature explaining that the current version of SB 1 “breaches the inviolable contract” for current and future Kentucky retirees.

“The Commonwealth’s public employees have upheld their end of the contract, working for decades on behalf of our Kentucky families. The General Assembly, on the other hand, will violate the contract if it passes the current version of SB 1 into law, as it would materially reduce, alter, or impair the contract’s guaranteed benefits,” the letter read.

Beshear, who suggested lawmakers look to expand gambling in the Bluegrass State for its pension funds rather than pass a reform bill, cited 21 legal violations regarding SB 1 in his letter.

“For teachers, SB 1 unlawfully reduces cost of living adjustments, caps the use of sick time, extends years of service to qualify for some benefits, and forces teachers to contribute significantly more of their salaries to their retirement,” read Beshear’s letter, which also mentioned that his office did not receive an advanced copy of the reform bill. “For state police officers, state employees, and country employees, the bill unlawfully changes how public employees’ retirement is calculated, reduces or caps sick leave benefits, and imposes new deductions on already strapped salaries.”

Currently, Kentucky’s pension system is facing a shortfall of more than $40 billion.  Bowen, who was not happy with the timing of the letter, warned of a “terrible ending” if the bill does not pass.

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