On Wednesday, Gov. Matt Bevin signed into law a bill that provides the state’s regional universities and other quasi-governmental agencies with a freeze of employer contributions and options to exit the underfunded pension system if they choose.
The state Senate voted 27-11 Wednesday morning to pass the bill on the fifth day of the special session called by Gov. Matt Bevin to tackle the pension issue as agencies including universities, rape crisis centers, health departments, and others face bankruptcy and other financial hardships due to the pension costs they face.
Following the passage of the bill by the Senate and the signature of both the Senate President and Speaker of the House, House Bill 1 was sent to Gov. Matt Bevin who signed the bill into law.
House Bill 1, the pension bill, allows those groups 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. No agency is forced to exit under this plan. 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.
Many of the agencies that are impacted by the legislation have asked lawmakers for a solution to this issue and the bill is a revised version of what was passed by the General Assembly in the 2019 session but was vetoed by the governor due to technical issues.
The bill has an emergency clause, meaning it goings into effect immediately. Both the state House and Senate adjourned Sine Die on Wednesday and are not expected to be back in session until January 2020.