KY Lawmakers: Agreement Reached On Pension Plan

FRANKFORT, Ky. (AP) - Kentucky lawmakers say they've agreed on a proposal aimed at strengthening the state's financially troubled
pension system, and the governor indicated he would call a special
session for the plan to be considered.
House and Senate leaders who met at the Capitol on Tuesday said
they agreed on a plan and would ask Gov. Steve Beshear to call the
special session. Beshear's office issued a statement Tuesday night
saying he would call a special session for June 23 if final details
of a draft bill are worked out.
"We've got a good start, and I think the people of Kentucky
deserve it," House Speaker Jody Richards, D-Bowling Green, said.
"We have compiled a rather significant liability and we need to
start working on paying it down."
Kentucky's state retirement system covers retirement benefits
for more than 445,000 people. The system is facing an unfunded
liability of more than $26 billion.
Lawmakers have said that without swift action, the system is
facing an eventual financial collapse.
In late May, Beshear called on lawmakers to lay down their
partisan differences in the interest of crafting a quick pension
fix. Beshear, who is in Japan this week, has said he's willing to
call a special session if lawmakers agree on a plan.
Beshear has also set up a working group to study more complex
and divisive pension issues, such as whether future state employees
should have a 401(k)-type retirement plan rather than a set pension
with guaranteed benefits.
A pension proposal stalled during the final hours of the
legislature's regular session earlier this year.
Beshear, a Democrat, has said the pension system could save
hundreds of millions per year by acting on a plan now. Beshear has
also said that local governments could get immediate financial
relief this year, under the proposal.
Among the proposed changes - which would affect only new hires -
state employees would have to wait until the sum of their age and
years of employment totaled 87 to retire with full benefits.
Employees who are 65 or older could retire with full benefits and
five years of service. The plan would also require new employees to
contribute 1 percent of their salaries to health insurance.
Rep. Mike Cherry, D-Princeton, said he believed the plan could
stop the state's unfunded liability from increasing by up to $250
million per year.
Senate President David Williams, R-Burkesville, said it was
uncertain how much the state would save under the proposal.
Nevertheless, the legislature and pension working group would
continue working on the issue.
"We do believe collectively that this bill is worth having a
five-day special session over because of the impact that it will
have overall," Williams said.
Richards said lawmakers could address other issues in the
session scheduled to start in January.
Mike Haydon, Beshear's legislative representative, said Beshear
would review the proposal while in Japan.
"I think this captures the spirit of what the governor asked
the leadership of the House and Senate to do," Haydon said. "And
I think that he's very pleased at the commitment, and dedication
and bipartisanship that he's seen from this group."

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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