Senate floor leaders disagree on Bevin’s pension bill
Sticking to the script prepared by Republicans, a Senate committee Tuesday signed off on Gov. Matt Bevin’s proposal to provide incentives for regional universities, county health departments, and other quasi-governmental agencies to exit the state pension system.
The Senate State and Local Government Committee, on an 8-to-3 vote along party lines, sent House Bill 1 to the full Senate without making any changes to it. The Senate is expected to approve it Wednesday and conclude a special legislative session called by the Republican governor that began last Friday. The session costs taxpayers about $65,500 a day.
The House approved the bill Monday on a 52-46 vote.
Critics of the measure expect it to face a legal challenge on whether it violates the inviolable contract of agency employees that guarantees state workers will receive the pension benefits promised to them when hired.
Sen. Morgan McGarvey, D-Louisville, said after Tuesday’s committee hearing that the bill is “the first step in dismantling the entire Kentucky retirement system. I don’t think we should allow that to happen.”
He said the topic of discussion on Kentucky’s pension woes should be adding more revenue.
Kentucky Retirement Systems faces unfunded pension liabilities of $23.5 billion, and contribution rates have soared. State government is paying the equivalent of 84 percent of its payroll into KRS for pensions. The rate for the regional universities and other quasi-governmental entities had been capped at 49 percent until the new fiscal year began July 1.
McGarvey said Republicans, like in the movie “Top Gun,” “feel the need for speed,” and “want to continue dismantling this retirement system so they can impact other groups.”
Senate Majority Leader Damon Thayer, R-Georgetown, dismissed McGarvey’s comments as “a red herring that Democrats are throwing out here in the last minute to try to derail the bill or appeal to their base.”
Thayer said Republicans “clearly are trying to save the system” and “these are the kinds of reforms that need to be made.”
He said the Senate will meet at 9 a.m. Wednesday and “we hope we can get it to the governor for his signature sometime late tomorrow morning.” Republicans outnumber Democrats 29-9 in the Senate. The GOP outnumber Democrats in the House 61-39.
The sponsor of House Bill 1, Republican James Tipton of Taylorsville, told the Senate committee that some agencies that provide critical services to Kentuckians may have to close if there is no financial relief for their skyrocketing pension costs.
The bill allows the agency employers to decide next year whether to stay in the Kentucky Retirement Systems and face a big increase in their pension contribution rates or agree to leave.
The bill offers several incentives to the employers if they agree to freeze their employees’ pensions and transfer them into a retirement system like a 401(k) plan. About 7,000 public employees would be affected, many who have been in their jobs for years.
Murray State University President Bob Jackson, a former Democratic state senator, told the Senate committee that he supports House Bill 1. He said the employer contribution rate for the university would balloon from 10 percent of payroll 10 years ago to 84 percent if the bill does not go into effect.
In dollars, he said, that amounts to $1.66 million to about $11 million.