Kentucky pension reform: Massive bill released for lawmakers' scrutiny

FRANKFORT, Ky. – The pension reform bill was finally released to legislators late Friday, causing additional concerns to some critics of a framework for the bill released on Oct. 18 by Gov. Matt Bevin and top Republican leaders.

The governor says the 505-page bill honors all commitments made to public employees and retirees while taking urgently needed action to finally put the state on course to paying unfunded liabilities within its pension systems. The unfunded liabilities are officially booked at about $40 billion, but Bevin says the total is actually greater than $64 billion.

Critics, including numerous education organizations, say the bill breaks some promises and would make it much harder to attract and retain good teachers and public employees.

Legislators contacted Saturday morning said they plan to spend the weekend examining the bill for details showing exactly how the framework would be implemented and if there are any additional provisions that had not been included in the framework.

“I don’t expect any surprises, but if my reading of the bill shows that it is a reflection of what was disclosed last week I expect to be able to support it,” said Louisville Republican Rep. Jerry Miller.

Rep. Jim Wayne, a Louisville Democrat, said, “I’m glad we have a bill to study and see the specific wording. … But if it reflects exactly what is in the plan, there’s no way I can hurt current and future retirees and new workers coming on who would be given some of the weakest pensions in the nation under this plan.”

Some critics of the framework said the bill provides additional reasons for them to be opposed.

Jason Bailey, executive director of the Kentucky Center for Economic Policy, said the bill “raises new questions and concerns.”

Bailey said his analysis of the bill shows that money that would go into the retiree health care plans from a 3 percent additional contribution from current teachers and other public employees will not benefit that program “because it will be offset by a 3 percent lower employer contribution to retiree healthcare.”

Bailey said there’s reason for employees and teachers to question the provision requiring them to pay 3 percent of their salaries to the health care plans because he said those plans are in much stronger financial shape than the pension plans and are improving.

Amanda Stamper, communications director for Bevin, said in an email Saturday, “The retiree health care plans are underfunded as well – nearly $6 billion. The 3 percent of salary contribution will shore up the health care plans that provide health benefits for life beginning at retirement. With ever-increasing health care costs and premiums for those in the private sector, this investment should provide current and future teachers and public servants peace of mind.”

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Jim Carroll, president of the advocacy group Kentucky Government Retirees, released a statement Saturday calling the additional 3 percent contribution for retiree health care a “pay cut.” 

He questioned how it came to be in the framework, and now in the bill, because he said it “was neither analyzed nor recommended” in the August report of the Bevin administration’s pension consultant, PFM Group, of Philadelphia.

Carroll also said that the bill shows “many future employees also will no longer be protected by employer-provided disability or death benefits.”

Bevin has promised he will call lawmakers into special session to consider pension reforms in 2017, but he has not yet done so. Legislators interviewed in the past week said they did not know what date the governor will set for the start of that session, some saying it could be as soon as Nov. 6, others saying it may not begin until December.

Read the documents here: