A nonprofit publication of the Kentucky Center for Public Service Journalism

Governor Matt Bevin sends letter to lawmakers seeking support for pension proposal

By Tom Latek
Kentucky Today

Gov. Matt Bevin sent a letter to state lawmakers Wednesday, seeking support for his pension proposal affecting Kentucky’s regional universities, quasi-governmental agencies and their employees considered during a special session before July 1.

Members of his administration held briefings on his plan for Republican lawmakers last week and for House Democrats earlier this week.

Members of the media were allowed in the Monday briefing and heard Deputy Chief of Staff Bryan Sunderland say that without relief, pension costs to the agencies, based upon the percentage of their payroll, will be “untenable.”  

“We have universities that are in the untenable situation of going from about a 49 percent cost of their pensions to about 83 percent pension cost,” he said. “It is a huge jump, a very financially taxing thing that by law, is going to go into effect July 1.”

Gov. Matt Bevin send out a letter to lawmakers asking for support of his pension proposal before he calls a special session. (Photo by Mark Maynard, Kentucky Today)

However, lawmakers of both parties and both the House and Senate have said there is not enough support for the measure to pass, since it would likely be considered an appropriations bill, and in a non-budget year it would require a supermajority of both chambers to approve it.

House Minority Whip Joni Jenkins, D-Shively, said if there is a special session, the Democrats would likely introduce a bill to freeze the pension costs for another year, then give a bipartisan pension task force appointed by House and Senate leaders a chance to finish work on a comprehensive plan, in time for action in 2020 session, which is a budget year.

The governor’s proposal includes a one-year freeze on the rates, giving agencies that time to determine if they will stay in the system or opt-out, paying their unfunded liability in either a lump sum or over 30 years.

However, the governor’s letter said he would not just enact the freeze and wait until next year’s legislative session to act.  “Last year’s freeze, coupled with another one-year rate freeze, will result in nearly $250 million in underfunding.  The days of ‘kicking the pension can down the road’ are over.”

He said some lawmakers have stated that they would not support the bill unless they allow the agencies to leave the Kentucky Retirement Systems while allowing Tier I and Tier II employees to decide if they will stay in the system as individuals.  

“This concept is wrought with legal issues, a heavy financial cost and a crippling administrative burden,” the governor said.

Bevin pointed to legislation passed near unanimously in 2015, which included the same voluntary opt-out provision as in his current proposal; as well as bills passed in 2017 and 2018 which allowed the agencies to implement new benefits in the future while locking in benefits already accrued by employees.

“Failure of the legislature to pass this bill prior to July 1, 2019, will lead to the discontinuation of many vital services and will result in many of the state employees, whom we are trying to protect, losing their jobs,” Bevin said. “This does not have to be the case.  The ability to save these organizations from financial catastrophe, now rest in the hands of the 138 legislators receiving this letter.”

Bevin has released letters from the regional public universities and quasi-governmental agencies, who have expressed support for the legislation.

House Democratic leaders responded to the letter, issuing a statement saying they recognize action must be taken to solve the impending negative impact upon quasi-governmental agencies.

“However, this isn’t the solution we or Kentuckians were promised. We continue to believe the pension problem is too large to be solved by the governor and a few people in closed door meetings. We call upon the governor to open the process up to both chambers, both parties, the public, and experts. We stand ready to help solve this. The question isn’t do we need to act, clearly we do.  The question is, will we do so in a responsible bipartisan manner?”

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