Kentucky Lawmakers Return to Tackle Retirement System Mess

Pension reform, stymied in court, is on the top of the lawmakers’ agenda.

As the Kentucky legislative session begins Tuesday, state pension reform is once again at the top of the agenda.

In 2018, the state Supreme Court unanimously struck down legislation passed by the General Assembly on the grounds that the way the bill was enacted was illegal.

This was the second time the pension reforms, which were to change the retirement benefits of new teachers and cut the number of accrued sick days used toward retirement, were cancelled by the courts last year.

Initially, the lower-level Circuit Court had negated the bill, but was challenged by Gov. Matt Bevin. He had set the measure in motion when he tucked the legislation into a sewage bill at the legislative session’s 11th hour. The changes were then fought by Attorney General Andy Beshear, who won both cases. Beshear is running for governor this year, against Bevin, who seeks another term.

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“Any legislation must comply with the Kentucky Constitution and should result from an open and transparent process that includes all stakeholders,” Beshear told CIO in an emailed statement. “It is time for the Kentucky General Assembly to pass legislation expanding gaming and dedicate 100 percent of the revenue to our public pension systems.”

Despite last year’s setbacks, Bevin insists something can be done about the state’s $40 billion pension hole, and members of the legislature agree that it is a pressing issue.

“It’s well documented that we have somewhere around a $40 billion unfunded liability in the pension systems,” Senate President Robert Stivers told the Northern Kentucky Tribune. “We’re going to have to address that, and funding can’t be the only solution.”

Stivers added that actuarial analyses will suggest that “maybe only 20% of the problem is funding,” but even without that 20%, there is still a $32 billion issue due to “structural problems with the systems.”

Senate Majority Leader Daymon Thayer said he thinks there are enough state senators willing to pass “significant pension reform.”

“Our members in the Senate understand that this is a crisis and that we have to take some significant steps,” he said in an interview with news outlet WDRB.com.

Kentucky’s pension plan is 31% funded.

However, changes to the retirement systems are not the highest priority on state lawmakers’ agenda. They place a high priority on getting a school safety bill passed. This is in response to the Marshall County High School shooting last January, which saw the death of two students and the wounding of 19 others.

A bipartisan task force has been studying the school safety problem since June.

Governor Bevin could not be reached for comment.

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PBGC Director Nominee Gets Kicked Back to Trump

Clock runs out on controversial nod for brother-in-law of Mitch McConnell, Elaine Chao.

Gordon Hartogensis



The nomination of Gordon Hartogensis as director of the Pension Benefit Guaranty Corp. (PBGC) has been kicked back to President Trump due to inaction by the US Senate. 

In May, Trump nominated Hartogensis to replace PGBC Director Thomas Reeder, who was nominated by President Obama, and whose term was set to end in 2020. In a release announcing the nomination, the White House praised Hartogensis as “an investor and technology sector leader with experience managing financial equities, bonds, private placements, and software development.”

However, the move was criticized for its apparent nepotism, as Hartogensis is the brother-in-law of both Senate Majority Leader Mitch McConnell and Transportation Secretary Elaine Chao. The 2018 legislative session ended without a formal vote on Hartogensis’ appointment, and as a result, Senate rules require the nomination to be returned to the president.

The nomination “raised serious concerns” for Sens. Patty Murray (D-Washington), and Ron Wyden (D-Oregon), who sent a letter to Trump after the announcement demanding an explanation for replacing Reeder with Hartogensis. The senators said Hartogensis “seems to have little to no prior experience relevant to the pension system and the work of the PBGC.”

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The senators added that “we are troubled by this unexpected and seemingly unnecessary change in the agency’s leadership, particularly as the country faces a multiemployer pension crisis.”

They also defended Reeder’s tenure, saying that he has overseen improvements in the single-employer program, and has been a proponent of reforms to help fend off the multiemployer program’s impending insolvency. They added that under Reeder’s leadership, the PBGC’s single-employer program has seen its deficit nearly cut in half.

In November, the Senate Finance Committee convened to vote on three presidential nominations, one of which was Hartogensis’. However, due to the absence of several members of the committee, the vote was postponed and was never rescheduled before the end of the 2018 legislative session.

According to Senate Rule XXXI, paragraph 6, of the Standing Rules of the Senate, “nominations neither confirmed nor rejected during the session at which they are made shall not be acted upon at any succeeding session without being again made to the Senate by the President.”

The PBGC declined to comment for this article.

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