A long-awaited bill to overhaul Kentucky’s financially ailing public pension systems could be filed as soon as Monday, House Speaker Pro Tempore David Osborne said Friday.
Osborne said Republican House leaders are still receiving details about the financial costs of their proposal, but if their questions are answered with the latest round of information they hope to unveil the bill Monday.
“Unless it creates more questions, which is what’s happened the last couple of times we’ve gotten information back,” Osborne said of releasing the bill Monday.
“As we have said the entire time, the process will dictate when we do it, and we want to do it as quickly as we possibly can, but at the same time we’re not going to rush it without complete information,” he said.
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Kentucky’s pension systems have an unfunded liability of more than $40 billion, making them among the worst funded in the nation. Gov. Matt Bevin, a Republican, had promised to call a special legislative session to deal with the issue in 2017, but the House balked at his original proposal to reform the system.
On Friday, Bevin remained optimistic that the legislature will approve pension reform this spring, but said it’s a “function of focus” for lawmakers.
“I appreciate that we want to get dogs out of the back seats of cars on hot days, but I think the pension bill is a little more important,” Bevin told reporters. “I would encourage our legislators to focus on just getting it over the end line. They have what they need. They just need to actually complete the task.”
Senate President Robert Stivers said the bill has been delayed as lawmakers await the results of a complex actuarial analysis that spells out how much money any proposed changes would cost the state. In the House, Osborne has said he refuses to release a bill until lawmakers know all of its financial details.
“We’ve seen what happens when we release bills without all the information out there,” Osborne said, referring to the plan Bevin released last fall that enraged many retired teachers and state workers. “And we made a commitment to our members that we weren’t going to do that until we had all the information available to give them every opportunity to make the decisions, to communicate with their constituency and the financial side of that is very important.”
Osborne said House leaders are having conversations about whether it is worthwhile to make changes to the pension system that would put more pressure on the budget this year in order to lower the cost of the state’s pension bill 30 years from now.
For example, if the legislature were to require the Kentucky Teachers Retirement System to change its funding formula this year, it could cost the state an additional $400 million, according to Jason Bailey, executive director of the Kentucky Center for Economic Policy, a liberal-leaning think tank.
There also are questions about whether it is advisable to move current and future public employees into a 401-(k) style retirement plan because it could force the retirement systems into making lower-returning investments.
The House is committed to fully funding the pension system, as Bevin proposed in his two-year state spending plan, and any structural changes are secondary, Osborne said.
“Until we make the commitment and honor the commitment to fund it then it doesn’t matter what changes we make,” Osborne said. “They are hopelessly married together. The only way to really fix it is to put more money in it.”
Bevin pushed for drastic changes when he released his plan this fall, only to be met with strong opposition from teachers and other public employees.
On Friday, Bevin said he still thinks lawmakers will make significant changes to the pension systems.
“I am very confident that what we get will be a good bill,” Bevin said. “And that will help us to move forward with confidence that the checks that retirees expect will actually come. That’s the key. The real purpose of this is to make sure that our retirees actually get the checks that they anticipate in their retirement.”