Gov. Matt Bevin’s draft bill to reshape Kentucky’s retirement systems has run aground in the state House, where growing concerns for the financial security of school teachers and public employees were joined Thursday by sexual harassment allegations that put House Speaker Jeff Hoover’s political future in doubt.
Hoover, R-Jamestown, stood alongside Bevin and Senate President Robert Stivers last month to unveil the framework of controversial pension changes that Kentucky’s Republican leaders are promoting, but even Hoover told an emotional crowd of teachers in Somerset Thursday night that he would not vote for the pension bill in its current form.
Hoover’s ability to rally support for an altered bill could be threatened by a news report that said Hoover — who is married with three daughters — has settled a sexual harassment claim made by a woman employed in his House office.
Even without Hoover’s troubles as a distraction, “the votes aren’t here for this bill is what I’m hearing,” said state Rep. Brian Linder, R-Dry Ridge, co-chairman of the Public Pension Oversight Board. Various changes would have to be made to satisfy different interest groups raising objections and win the necessary House votes, Linder said.
“I’m kind of a compromiser,” Linder said. “I’ve always worked in my life to try and get people to common ground.”
As for Hoover, Linder said, “as speaker, he plays an important role in all of this.”
“I haven’t really had a chance to talk to anybody about this yet,” Linder said. “I came in late this morning, so I haven’t really had a chance to gauge anybody’s feelings about this. But he’s obviously been a big part of this, so I don’t know how this is going to go forward.”
Another lawmaker was more blunt. State Rep. C. Wesley Morgan, R-Richmond, said the allegations against Hoover are serious enough, if true, to derail the pension debate for the present.
“It would absolutely be a disaster for any immediate special session,” said Morgan, who opposes the draft pension bill that Bevin made public last Friday.
State Rep. James Kay, D-Versailles, said it’s time to pause the pension debate, anyway, regardless of “Speaker Hoover’s issues.”
“It’s never helpful to be discussing those type of things,” said Kay, who is also a member of the pension oversight panel.
“But one of the things that’s overshadowed here is that we’re undertaking huge, comprehensive reforms,” Kay said. “I think we need to slow down to make sure that we’re doing the right thing and that we’re not overstepping with the usual knee-jerk reactions that happen in Frankfort.”
The spokesman for Kentucky Government Retirees, an advocacy group that opposes Bevin’s pension proposals, shared a similar sentiment.
“We certainly need all hands on deck to deal with pensions, and that obviously would be complicated if Jeff Hoover were to suddenly resign,” said Jim Carroll.
“However, we have reached the conclusion that a stake needs to be driven through the heart of this pension bill, anyway,” Carroll said. “Every bit of reporting finds more flaws with it. The process behind drafting it was opaque. We need to start again from the beginning, this time with a good-faith effort to reach a public consensus.”
The longer that Bevin’s draft pension bill is stalled in public, the more time its critics have to find fault with it.
So far, opponents have challenged its proposed 3 percent pay cut for teachers and public employees, the official explanation for which keeps changing; the loss of death benefits for some police officers and their families; the end of legally guaranteed sick days for teachers and other school district employees; and the elimination of cost-of-living adjustments for retired teachers for a five-year span.
Another quirk in the bill was exposed Thursday: When state budget director John Chilton briefed the Public Pension Oversight Board on the bill, Kay asked why its “double dipping” ban would give special treatment to elected officials and gubernatorial appointees.
Unlike rank-and-file public retirees, who would have to forfeit their pensions for the duration if they returned to a public sector job, elected officials and gubernatorial appointees would get to keep collecting their pensions while they held their new jobs, Kay said.
“I don’t know if I can explain the motivation behind that,” Chilton told Kay. “I didn’t make that decision.”
If adopted by the legislature, the pension bill would place teachers and public employees hired after next July in defined-contribution accounts, rather than traditional pensions, shifting the burden to them to save enough for their retirements, but offering employer matches of 6 to 9 percent of salary.
Existing retirees and employees would get to keep many of the benefits they were expecting, including defined-benefits pensions, but not all. For example, retired teachers would forfeit cost-of-living adjustments for five years, an especially painful squeeze since they do not get Social Security, and teachers would have their pensions capped after 27 years of service, except for one three-year window that would begin in 2018.
Paying down the state’s unfunded liability — which ranges from $33 billion to $84 billion, depending on which accounting method you use — will require the state to find an additional $1 billion a year in its roughly $12 billion budget, Chilton told the panel.
“The financial obligations we’re facing are huge,” Chilton said. “There are some really tough policy decisions we’re facing. The next budget session (of the legislature) is going to be brutal.”
State Sen. Dennis Parrett, D-Elizabethtown, asked Chilton why the Bevin administration is not first looking at tax reform in order to raise more revenue that could help pay down the unfunded pension liability. Chilton told Parrett that the governor is interested in examining the state’s tax code, but not until sometime in the future, after the pension issue has been resolved.
Reporters Jack Brammer and Bill Estep contributed to this story.