Kentucky Gov. Matt Bevin has called legislators back to Frankfort on Monday to take up pension reform legislation after a bill passed in the 2018 session was overturned by the Kentucky Supreme Court.
In a press conference called Monday afternoon, Bevin stated the Supreme Court decision resulted in a tremendous responsibility for the legislature as he added credit rating agencies have already indicated they will be downgrading Kentucky because of the lack of changes to the pension systems.
Bevin said the state has a legal, moral, and financial responsibility to deliver on the promises that have been made and the only chance the state has to save the retirement systems is to make changes for future hires.
Because of this, the General Assembly has been called back to Frankfort by Bevin to deal with the issue before the end of the year. A special session begins Monday night at 8 pm EST.
Bevin noted it is not an ideal time to deal with the issue but stated the situation is also not ideal with the previous bill being overturned.
The reform bill passed in the 2018 session was overturned by the Supreme Court because of the way the legislation was passed. Read more about that on The Bottom Line here.
Bevin noted that because of the timeline presented with changes needing to be made before the end of 2018, the legislature will have to pass a bill which does not “chart any new territory”, meaning they will have to pass the same or a very similar bill to what was passed in the 2018 session.
The amended version of Senate Bill 151 that passed in 2018 moved future hires into the Kentucky Teachers’ Retirement System (KTRS) into a hybrid cash-balance plan and capped the amount of sick leave current teachers can use toward their retirement, as was included in the original Senate Bill 1. The new proposal did not change current and retired teachers’ cost of living adjustments (COLAs), and it removed the provision that said an employee must be either 60 years old or work 35 years to have their benefit calculated with that 3.0 factor.
The plan adopted 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 were also transitioned to the same cash-balance system provided to future employees in this version of the bill.
In the press conference, Bevin said the state owes it to the people of Kentucky to make these reforms and said he has confidence in legislative leaders and the General Assembly to pass reforms during this time.
The Kentucky Chamber urged legislative leaders to pass the same pension reform bill “quickly and cleanly” after the Supreme Court decision came down last week.
Stay tuned to The Bottom Line throughout the week for updates on the special session.