Politics & Government

Public pension case goes before Kentucky Supreme Court. They had lots of questions.

After more than a year of political and legal debate that prompted teachers and state workers to swarm the Kentucky Capitol in protest, the Kentucky Supreme Court heard arguments Thursday morning on the state’s controversial new public pension law.

As Democratic Attorney General Andy Beshear and Steve Pitt, the general counsel for Republican Gov. Matt Bevin, argued the constitutionality of the law, the high court’s seven justices largely focused their questions on the legislative process that produced the bill.

Franklin Circuit Judge Philip Shephed ruled on June 20 that the legislature violated the Constitution by approving the bill without giving it the proper number of readings and not getting the support of a majority of all members in the House, which is required for bills that appropriate money.

The pension law was introduced and approved by the General Assembly in a matter of hours as a committee substitute. That means Senate Bill 151 was originally introduced and passed the Senate as a bill dealing with wastewater treatment regulations. It then got two of three required readings in the House before lawmakers scrapped the original 11-page bill and replaced it with a nearly 300-page pension law.

The amended bill was then voted out of the House and approved by the Senate in about seven hours, giving lawmakers little time to read the bill and the public no time to organize protests.

Beshear argued that because the substance of the bill was changed entirely, lawmakers were legally obligated to give the committee substitute three additional readings on three separate days. Giving the law its public readings as a wastewater treatment bill but approving a version that has no relation to wastewater treatment violated provisions of the Kentucky Constitution that were designed to allow time for public input, Beshear said.

“It’s about notice,” he said.

Some justices, though, noted that SB 151 was very similar to Senate Bill 1, the original pension bill that was sent back to committee when it didn’t have enough votes to pass the Senate.

Pitt’s argument hinged on the separation of powers between the branches of state government.

He argued that SB 151 received the constitutionally-required number of readings, making it legal.

It is up to lawmakers, not the judiciary, to determine whether the General Assembly’s committee substitute process is appropriate under the Constitution, he said.

“It’s easy to understand why some people would disagree with this sort of process,” Pitt said. “But the remedy there is not in this court.”

Pitt’s said only the General Assembly should be able to determine if the legislative body has violated the Constitution, which drew the attention of Justice Michelle Keller.

“To me it just seems like intellectually that’s a hard idea for me to get my head around,” Keller said.

In addition to impacting the retirement benefits of teachers and public employees, the case is expected to have political consequences. All 100 House seats and 19 of the 38 Senate seats are up for grabs this fall, and both Beshear and Bevin have said they will be candidates in next year’s race for governor.

A ruling by the Supreme Court in the case is not expected until after the Nov. 6 general elections.

Bevin signed SB 151 into law in April. He said the bill prevents the pension systems from falling further in debt, but does not do enough to erase their $40 billion unfunded liability.

Bevin mentioned in mid-2017 that he wanted a special legislative session to reform the state’s pension system. He raised the ire of teachers statewide last fall when he proposed a pension overhaul that included deep cuts in benefits for retired, existing and future public employees.

The bill lawmakers eventually approved spared retired teachers and made only one major change for existing teachers.

The new law placed teachers hired after Jan. 1, 2019, in a hybrid cash-balance plan, which is similar to a 401(k), rather than a traditional defined benefits pension and required them to work longer before becoming eligible for retirement.

It also required Kentucky Retirement Systems employees hired between 2003 and 2008 to pay 1 percent more of their pay for health care in retirement.

Many school districts around the state shut down on March 30 as teachers held “sick-outs,” and thousands of teachers stormed the Capitol April 2, chanting “Remember in November.”

Bevin, who likes to point out that he provided more money for teachers’ retirement benefits in his budget than any other governor, angered teachers even more when he suggested their absence in the class rooms that day left children home alone and vulnerable to sexual predators. He later apologized to those he said he hurt.

The day after Bevin signed the pension bill into law, Beshear, along with the Kentucky Education Association and the Kentucky State Fraternal Order of Police, filed suit against it in Franklin Circuit Court, saying it was unconstitutional.

In his June ruling, Judge Shepherd did not consider whether the law violates the state’s “inviolable contract” with teachers and other public workers. The inviolable contract includes various state laws that protect previously-promised worker benefits

After the hearing, Pitt told reporters that he was disappointed but not surprised that the court did not ask questions about the inviolable contract.

If the court upholds the Franklin Circuit Court ruling, Pitt said it will be difficult to prevent the state’s pension systems from collapsing in a few years. He also said he is concerned a ruling against the Bevin Administration would void other bills that were passed in a similar manner, such as a pension relief bill for local governments and several drug-related bills.

Beshear said that was a false argument designed to convince the court not to apply the law.