Pension relief for certain agencies passes through full House, moves to Senate

IMG_5331On Monday, the Kentucky House of Representatives passed a bill to bring relief to the state’s regional universities and other quasi-governmental agencies with a 52-46 vote.

House Bill 1, sponsored by Rep. James Allen Tipton, would allow Kentucky’s regional universities and other quasi-governmental agencies the opportunity to exit the Kentucky Retirement System (KRS) and move new employees of their institutions into a new plan, more like a 401k, to ensure pension costs do not continue to hinder their budgets. If an entity decides to exit the system, they will pay off their unfunded liability to the pension plan over a set number of years or in a lump sum payment so the system is not left with the cost of their employees.

The legislation also implements a freeze of the 49 percent employer contribution rate those entities have been paying into the system for their employees. Other entities in the retirement system are currently paying 84 percent but many of the agencies impacted by this bill face bankruptcy if their rates increase to that level.

In a floor speech about the bill, Rep. Tipton noted that the quasi-governmental agencies have a legal obligation to pay these bills but the legislature understands the difficulties faced by the groups and the issues that could arise if a bill to provide them relief is not passed.

Tipton stated he feels the process behind this bill has been the most transparent he has seen during his time in the legislature as there have been many briefings and discussions about the topic in recent months.

There was debate on the floor about amendments to the bill which dealt with the severability of the legislation but they were overruled because of the specific language of the governor’s call for a special session. The language in the call means if the attorney general again sues and the legislation is thrown out by the courts, all of the bill dies. Some expressed concerns about the freeze being lifted under this scenario.

House Bill 1 will be received in the Senate on Monday afternoon and given its first reading. From there, the bill will go to the Senate State Government Committee on Tuesday before being heard by the full Senate on Wednesday. Stay tuned to The Bottom Line for more information on the special session.

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Jacqueline Pitts
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