Politics & Government

Beshear: Latest version of pension bill still violates law 21 ways

Kentucky Attorney General Andy Beshear told lawmakers Tuesday that the Senate’s new version of a bill to reform the state’s public pension systems remains unconstitutional.

The latest version of Senate Bill 1 “fails to cure any of the 21 violations identified in SB 1, including unlawful reductions in cost of living adjustments for teachers, caps on the use of sick time and alterations to retirement allowance calculations.” Beshear wrote in a six-page letter to legislators that he posted on social media.

If passed into law, the revised version “would breach the inviolable contract, resulting in numerous lawsuits against the commonwealth — lawsuits the commonwealth will lose,” said Beshear, a Democrat.

Beshear told state lawmakers last week that the original bill violated 21 legally-binding promises the state has made public workers and retirees.

He said Tuesday that his office has reviewed a revised version of the 239-page bill that was published by the Legislative Research Commission.

Senate President Robert Stivers, R-Manchester, and the bill’s primary sponsor, Sen. Joe Bowen, R-Owensboro, said last week that the proposal is legal and that changes in the revised version would improve its legal standing.

They were not immediately available Tuesday to comment on Beshear’s new letter.

Stivers said Monday that the Senate State and Local Government Committee is awaiting an actuarial analysis of the revised bill and may vote on it this week. The committee is scheduled to meet Wednesday.

Kentucky’s public pension programs have an unfunded liability of more than $40 billion.

In Tuesday’s letter, Beshear said the state’s inviolable contract with retirees guarantees retired teachers a 1.5 percent annual cost-of-living adjustment. The revised SB 1 would reduce that from 1.5 percent to 1.0 percent.

Changes to how much teachers are required to contribute to the retirement system’s health fund also violate the inviolable contract, Beshear said.

Teachers must contribute a defined amount of their annual pay to the health fund, but the revised bill requires the board of the Kentucky Teachers’ Retirement System to increase member contributions by up to 1 percent annually under certain conditions.

“This increase materially impairs the rights guaranteed to KTRS members and therefore violates the inviolable contract,” said Beshear.

Concerning sick time used to increase service credit, Beshear said the inviolable contract does not cap the amount of accrued sick leave that teachers who started before July 1, 2008, may convert to additional service credit for purposes of their retirement.

The revised SB 1, he said, caps the amount of accrued sick leave that members may convert to the amount accrued as of Dec. 31, 2018.

“This limitation materially alters and impairs the rights and benefits due to employees who started before July 1, 2008, and therefore violates the inviolable contract,” Beshear said.

Jack Brammer: (502) 227-1198, @BGPolitics