Politics & Government

Kentucky pension bill challenged in court by Beshear and unions for teachers, police

Attorney General Andy Beshear, along with the Kentucky Education Association and the Kentucky State Fraternal Order of Police, filed suit Wednesday against the controversial public pension bill Gov. Matt Bevin signed into law Tuesday.

The 49-page lawsuit, filed in Franklin Circuit Court, said the bill “substantially alters and ultimately reduces the retirement benefits of the over 200,000 active members of the pension systems, including teachers, police officers, and firefighters.”

“In doing so, it breaks the ‘inviolable’ contract that the Commonwealth made with its public employees under state law,” the suit said. “By enacting Senate Bill 151, Gov. Bevin and the General Assembly have substantially impaired and broken that contract, in violation of the Kentucky Constitution and state statute.”

The plaintiffs ask the court to declare the new law unconstitutional and to grant an injunction preventing Bevin and the pension boards from enforcing it. The law, which Republican lawmakers introduced and approved on March 29 before the public had a chance to read the bill, will not take effect until this summer, and most of its provisions don’t kick in until January 1, 2019.

The suit is filed against Bevin, Senate President Robert Stivers, House Speaker Pro Tempore David Osborne and the governing boards of the Teachers’ Retirement System of Kentucky and the Kentucky Retirement Systems.

Bevin’s communications director, Elizabeth Kuhn, issued a statement accusing the attorney general and his father, former Democratic Gov. Steve Beshear, of repeatedly using the state’s pension systems for political gain.

“The Beshears have always treated pensions as political currency, so it’s no surprise that Attorney General Beshear filed this political lawsuit today,” said Kuhn. “Over eight years, former Gov. Steve Beshear underfunded the pension system by billions, recklessly diverting much needed funds to other causes and allowing the system to become the worst funded in the country. Now, the attorney general is carrying on the Beshear family legacy by trying to block a law that will strengthen our pension system.”

Kuhn said the attorney general “has threatened litigation since the process began, proving that he cared less about the contents of pension reform and more about scoring political points with the KEA — a reliable source for family fund raising.”

Senate Bill 151 places teachers hired after Jan. 1, 2019, in a hybrid cash-balance plan rather than a traditional pension and requires them to work longer before becoming eligible for retirement. It also requires KRS employees hired between 2003 and 2008 to pay 1 percent more of their pay for health care in retirement.

In a statement, House Minority Floor Leader Rocky Adkins, D-Sandy Hook, said the pension bill “negatively impacts the retirement systems for teachers and public employees and is certain to be thrown out in court.”

The lawsuit noted that the pension legislation initially was in another bill before being attached late in the session to a bill dealing with sewers. It said no actuarial analysis had been prepared on the bill as required by law.

“The process under which SB 151 was passed also violates numerous provisions of the Kentucky Constitution and state statute,” the suit said. “These laws were designed to prevent the exact trickery and exclusion of the public that the General Assembly exhibited on March 29.”

In a statement, Osborne said the legislature followed the law when it passed the pension bill.

“There is no question that the bill meets all constitutional requirements, both in the manner in which it was passed and its content,” said Osborne, R-Prospect.

The suit identifies at least 15 alleged violations of the inviolable contract, state laws that protects provided benefits to its workers.

For example, Beshear noted that state law allows teachers who started before July 1, 2008, to convert accrued sick leave toward retirement, and allows teachers hired after July 1, 2008, to convert up to 300 days of sick leave toward retirement.

The new law, Beshear said, caps the amount of accrued sick leave members may convert toward retirement to the amount accrued as of Dec. 31, 2018, “materially altering and impairing the rights and benefits due under the inviolable contract.”

The suit also contains an affidavit by KEA President Stephanie Winkler. In it, she said, the new law hurts teachers by violating the inviolable contract with the state and will “strongly induce teachers to retire earlier than they originally planned.”

The lawsuit has been assigned to Judge Phillip Shepherd. A hearing on the temporary injunction motion has been set for 9 a.m. April 18.

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