‘I will sue.’ Andy Beshear says Kentucky pension bill illegal.

Kentucky Attorney General Andy Beshear will challenge the Republican-led legislature’s controversial pension bill in court because he said it violates the non-voidable contract the state has made with teachers and other public workers.

“While that leadership broke their promise to you, I am going to keep my promise to you,” Beshear told hundreds of teachers gathered in the Capitol rotunda. “I will sue over this bill.”

Beshear, a Democrat, said he will file suit as soon as the governor signs Senate Bill 151, a bill related to sewage regulations that the House amended Thursday to include a 291-page pension overhaul plan. The House and Senate gave the bill final approval within a matter of hours Thursday night.

The latest pension bill was modeled after Senate Bill 1, but several controversial proposals were removed. For example, it no longer cuts cost-of-living benefits for retirees and does not raise the retirement age for current teachers.

Beshear, though, said the bill still violates the inviolable contract in “at least 17 or 18” ways. Beshear had previously said Senate Bill 1 violated the law in 21 ways.

Though the latest bill has fewer changes that affect current teachers, it does prevent them from putting future unused sick days toward their retirement.

Republican lawmakers contend the use of sick days to enhance retirement benefits is not covered by the state’s inviolable contract with public employees, citing testimony to lawmakers by Beau Barnes, deputy executive counsel and executive secretary of the Teachers’ Retirement System.

“One of the provisions not included by the inviolable contract, according to Mr. Barnes, is sick day payments being included in the pension calculations,” said John Cox, the communications director for Senate Republicans.

When contacted Friday, Barnes confirmed that he believes sick leave for teachers is not covered by the inviolable contract. When asked if there were any provisions in the bill that did violate the inviolable contract with teachers, Barnes said he had not seen any yet but was still reviewing the bill.

Beshear, though, said he believes sick leave is covered and that the legislature caused harm to the state by removing the provision.

“The sick leave is covered by the inviolable contract and just look at the harm the change has caused,” Beshear said, citing the closure of many school districts Friday as teachers called in sick. “They should recognize bad policy and illegal policy and repeal it.”

Beshear said he also plans to challenge the law based on Section 1 of KRS 6.350, which says a bill that makes changes to retirement benefits shall not be passed through committee without an actuarial analysis.

When Democrats raised objections about the lack of an analysis of how the bill would impact the state’s pension systems, House State Government Chairman Jerry Miller, R-Louisville, said he would allow a vote on the bill regardless of the statute.

“I am ruling that we are going to pass this vote on this matter,” Miller told the committee. “We are going to to all hear it on the floor, we are all going to speak about it on the floor as anyone wishes to speak. Because that’s really where we need to get this bill.”

Republicans have cited a supreme court ruling, Board of Trustees of the Judicial Form Retirement vs. Attorney General of the Commonwealth of Kentucky, that they interpret as allowing them to override the statute as if it were a House rule.

“There has actually been court rulings on the issue,” said House Speaker Pro Tempore David Osborne, R-Prospect. “And it goes back to the ruling that one legislature cannot bind the actions of another legislature.”

Senate President Robert Stivers, R-Manchester, took a different approach, saying the existing actuarial analysis on SB 1 applied to the House Committee Substitute for SB 151 because every provision in the new bill was contained in SB 1.

On Friday, the Legislative Research Commission posted an actuarial analysis for SB 151 that consists of a letter from David Eager, the interim executive director of the Kentucky Retirement Systems.

“We have reviewed the proposed legislation in SB 151 and have determined that the proposed changes that apply to retirement systems maintained by KRS will have the same fiscal impact as that determined for SB 1 Sub 1,” Eager wrote.

However, the majority of changes to the pension bill affect the Teachers’ Retirement System of Kentucky. There is no actuarial analysis of how the bill affects that system, though lawmakers said the latest bill will save the state less money because it removes cuts to cost-of-living adjustments.

Lawmakers had said Senate Bill 1 would have saved the state about $3.2 billion over 30 years. Kentucky’s pension systems have an unfunded liability of more than $40 billion.

State Rep. Jim Wayne, D-Louisville, said he has read the Supreme Court ruling and still thinks the legislature violated the law.

“It doesn’t say that the legislature can basically ignore it,” Wayne said. “So the legislature just broke its own law.”

This story was originally published March 30, 2018 at 10:28 AM with the headline "‘I will sue.’ Andy Beshear says Kentucky pension bill illegal.."