Lawmakers introduce two pension bills in special session with changes from previously passed reforms

On Monday night, members of Kentucky’s General Assembly came back to Frankfort to begin a special session to deal with pension reforms called by Gov. Matt Bevin on Monday afternoon.


The pension reform bills, House Bill 1 and House Bill 2, will begin in the House as two pieces of legislation were introduced Monday night by Rep. Jerry Miller of Louisville.  The two bills are similar to the legislation passed during the 2018 legislative session with some subtracted language from the original bill in the first piece of legislation and some additions in the second.

One of the biggest changes that will be seen in the pension reforms from the bill passed earlier this year is discarding a provision that set up a level-dollar funding mechanism for pension funding and ensuring a statutory requirement for full funding for the actuarially required contribution (ARC). The bill will retain the provision stating school boards will have to contribute an additional 2% of pay for new members into the system to offset the costs to the state.

The new bill also removes most changes made to current pension plan (Tier I and Tier II) employees of the Kentucky Retirement System (KRS) including sick leave credit changes, comp time paid at retirement, an additional contribution of 1% for employees to help pay for the fund’s retiree health benefits, the creation of an optional 401(a) plan for employees similar to what is seen in the private sector, and other small changes.

The Kentucky Teachers’ Retirement System (KTRS), on the other hand, would still see changes to the sick leave policy under the new plan as teachers would be paid for their accrued sick leave in the form of a check but it would no longer “bump” their retirement payments as of December 31, 2018.

The new bill would still move future Kentucky teachers into a hybrid cash-balance plan where employees contribute 9% of salary with an employer/state match of 8% plus interest credit. New teachers would be eligible for retirement at age 65 with enough years of service or meet the rule of 87, which means the teachers’ age plus their years of service must be 87.

The second bill introduced Monday would limit the 3% factor to years of service in excess of 30 for teachers and establish a phase-in for the county employee retirement system (CERS) to ensure CERS employer contribution rates don’t increase more than 12% per year over between 2018-2028 to provide financial stability to local governments facing large burdens due to increased pension costs.

The bills will be heard in the House State Government Committee for discussion without a vote at 1pm on Tuesday before the House gavels in at 2pm. The Senate plans to gavel in at 10am on Tuesday.

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Jacqueline Pitts
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