A nonprofit publication of the Kentucky Center for Public Service Journalism

Pension legislation the only item on agenda as Bevin makes formal call for special session Thursday

By Tom Latek
Kentucky Today

Gov. Matt Bevin issued his formal call Thursday afternoon for a special session of the General Assembly starting Friday at 8 a.m., with pension legislation the only item on the agenda.

The governor’s proposal would only affect the state’s regional public universities, the Kentucky Community and Technical College System and other quasi-governmental agencies such as local health departments, rape crisis centers and child advocacy centers.

Those 118 entities currently participate in the Non-Hazardous Kentucky Employees Retirement System, which is one of the most underfunded pension plans in the nation.

According to the governor’s call, his legislation would freeze the employer contribution rate retroactive to July 1 at 49.41 percent until June 30.

Lawmakers will be back in session Friday morning to discuss pension legislation. (Photo by Tom Latek, Kentucky Today)

It also provides for a one-time window until June 30 for the agencies to end participation in the pension system by paying the actuarial costs, either by in a lump sum or in installments. That decision must be made between April 1 and May 1.

Agencies leaving the system would have to pledge security to the state of any property they own, including bank accounts, investments and real estate until they pay-off the state.

Tier I and II employees of the agencies, those who have been in the retirement system for a longer period, could remain in the system if the agency agrees to pay the additional costs.

If the agency is delinquent by more than 90 days in installment payments, his proposal would prevent benefits and service credits for those Tier I and II employees from accruing until the agency payments are up to date.

The Finance and Administration Cabinet could withhold state appropriations to delinquent agencies to bring employer payments into compliance.

Those agencies who leave the system would have to offer employees a defined contribution plan such as a 401-k, or an alternative, but not a defined benefit plan, such as they currently have.

Even after leaving the system, agency employees could continue their state health and life insurance plans.

His proposal would also allow the agencies who decide to leave the system to seek financing for their buy-out.

Any legislation passed would contain an emergency clause, meaning it would become law upon the signature of the governor.

“The governor’s call completely crosses the line and makes a mockery of the legislative process,” said House Democratic leader Rocky Adkins. “Matt Bevin only has the power to call and dictate the subject matter of a special session. He does not have the power to write the legislation as well. This is clearly a violation of separation of powers and drives a stake in the heart of legislative independence.”

There has been some question as to whether pension legislation could be considered an appropriations measure. That’s important because instead of just needing a constitutional majority of 51 members of the House and 20 in the Senate to pass, appropriations bills in non-budget years such as 2019 require a 60 percent majority.

Although Republicans hold a supermajority in both chambers, there has been concern about whether there are 60 votes in the House to pass the measure.

A similar bill passed during the 2019 regular session was vetoed by the governor because, among other things, it would halt benefits including health insurance to retirees if an agency was delinquent in making buy-out payments, which Bevin said was illegal under current state law.

Since all bills are required to have three readings on three separate days, a special session can wrap up in as little as five days. A possible scenario on the special session could go as follows:

The bill will be introduced and have its first reading in the House on Friday. Lawmakers are expected to meet Saturday for a second reading and then Monday when the House could have a third reading and take final action. It’s not known yet whether a House committee will meet to vote on the bill Friday or Saturday.

The Senate could receive the bill and have the first reading on Monday, then a second reading Tuesday, with final action on Wednesday. If changes aren’t made that would require the concurrence of the House, that would be the final day of the special session.

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