With Kentucky’s pension reform bill passing in the Senate Wednesday, Gov. Matt Bevin’s afternoon signature marked a long-delayed victory in his bid to overhaul at least one of the state’s public retirement programs.
The measure (called HB 1) affects quasi-governmental agencies, such as health services. That leaves four other pension plans, all in financial distress, left to be dealt with. “While we have much work yet to do in addressing our $60 billion public pension crisis, HB 1 represents a positive step forward,” the governor said, referring to the rest of the troubled system.
The top chamber’s 27-11 vote brought Bevin a win in a state where wobbly public pensions are a hot political issue. The governor called the session last Friday after lawmakers again failed to pass an overhaul aimed at shoring up the state’s underfunded quasi-government pension program. The bill passed in the state House Monday.
The quasis are one of the five pension plans under the umbrella of the Kentucky Retirement System. Last year, Bevin futilely battled to revamp the teachers’ plan, which is 39.3% funded as of its most recent annual report.
The quasis’ plan is in an even more dire situation—it is just 12.9% funded. The new law will affect workers in health departments, regional universities, and domestic violence shelters, among others. It shunts new workers into a 401(k)-style plan, allows any of the 118 member organizations to leave the state pension system, and permits these agencies to stop making contributions to the program for a year.
If the agencies opt to leave the pension fund, they will have to pay their unfunded liabilities to beneficiaries in either a lump-sum payment or in installments.
Supporters of Bevin’s overhaul says it is a step in the right direction, while opponents argue it bars workers from receiving their full benefits, lets the agencies mistreat them, and freezes the accrued benefits of some members.
A similar bill affecting the quasis had passed earlier this year, but Bevin vetoed it by saying the legislation was poorly drafted.
If Bevin’s Republican administration is looking to make further reforms, it will have to wait until the next regular session, but only if he is re-elected in November. He faces Attorney General Andy Beshear, the Democratic nominee, who derailed previous attempts to revamp pensions, contending they were too hard on beneficiaries.
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Tags: Kentucky, Kentucky Pension Crisis, Kentucky Retirement System, Matt Bevin, Pension, Pension Reform, Senate