On Thursday, a new pension bill that would change the system for future hires and remove provisions impacting those currently in the system including cost of living adjustments and years of service before retirement was passed out of the House State Government Committee.
Senate Bill 151, sponsored by Sen. Joe Bowen, was presented with a committee substitute that Rep. John “Bam” Carney said is a “good compromise plan” after many months of debate and input from stakeholders.
While presenting the bill in committee, Carney said this revised pension reform will help stabilize the systems and bring relief to the state’s cities and counties as they face increased pension costs. Carney also stated the bill will improve Kentucky’s credit rating and lessen the burden on the state in the future.
The amended version of Senate Bill 151 would move future hires into the Kentucky Teachers’ Retirement System (KTRS) into a hybrid cash-balance plan and would cap the amount of sick leave current teachers can use toward their retirement, as was included in the original Senate Bill 1. Changes made in the new proposal include no changes to current and retired teachers’ cost of living adjustments (COLAs) and remove the provision that said an employee must be either 60 years old and put in 35 years of service to have their benefit calculated with that 3.0 factor.
The plan adopts a level dollar funding formula to ensure the correct amount of funds are put toward the systems up front rather than backloading payments as has been done previously.
Legislative pensions will also be transitioned to the same cash-balance system as employees in this version of the bill as well.
Senate Bill 151 and the committee substitute were presented Thursday without an actuarial analysis, but legislative leaders said the analysis will be discussed on the floor when the bill is voted on.
House Majority Leader Jonathan Shell, presenting alongside Rep. Carney, said the new proposal represents a “night and day” difference from the first proposal on pension reforms presented 10 months ago, stating it is a compromise plan which will put the systems on track over the years.
The revised version of Senate Bill 151 now moves to the full House for a vote and then back to the full Senate for a concurrence vote.
Continue checking The Bottom Line to get the latest on the pension reform legislation and more.