FRANKFORT, Ky. (WKYT) - A long-awaited pension reform bill has finally arrived in Frankfort, filed in the Senate on Day 33 of the regular legislative session.
The bill, Senate Bill 1, is a 30-year plan that the bill's sponsor, Sen. Joe Bowen, R-Owensboro, said will save the state's public pension systems. Lawmakers spent weeks and months of listening to state workers, teachers, experts and taxpayers, as well as drafting the bill, Sen. Bowen said.
"Future generations of Kentuckians are counting on us to get this right," Sen. Bowen said on the floor of the Senate shortly after filing the bill. "We were elected to solve big problems, and this plan...unravels the biggest fiscal crisis Kentucky has ever faced."
The bill appears to have scrapped the most controversial elements of Gov. Matt Bevin's pension proposal unveiled in October, that would have forced state workers and teachers into a 401(k)-style plan, and would have made them all pay an extra three percent for a retiree health benefit, Senate leaders said Tuesday. (One subset of state workers, employees hired between 2003 and 2008, would still have to put a portion of their earnings toward a retiree health insurance benefit, Stivers said.)
State workers in hybrid cash balance plans will continue in them, and state workers in defined benefit plans will continue in them, said Senate President Robert Stivers, R-Manchester. Workers will not be able to use their sick days as credit to reach retirement before the calendar says they are eligible, President Stivers said.
Hazardous employees remain the same, Stivers said.
Under SB1, teachers currently in a defined benefit program would continue in it, and all new teachers would be put in a hybrid cash balance plan instead of a traditional pension, Stivers said. He said that teachers with more than 20 years of service will remain in the system as it is operated and managed today; teachers with less than 20 years of service would have to work until age 60 with 35 years of service.
The bill does not suspend cost of living adjustments - Gov. Bevin's proposal called for a five-year freeze - but it does cut them in half, from 1.5% to 0.75%, for 12 years, Stivers said.
"When this bill passes," Stivers said in a news release, "we will over time eliminate the unfunded liability that has been estimated to be as much as $60 billion."
Sen. Bowen said lawmakers are committed to fully funding the plan, allocating $3 billion from the state's general fund in the upcoming budget - about 14 percent of the total budget. Bowen said SB1 solves the pension problem before the state goes bankrupt - but it will take time.
"It took a long time to dig this hole that we're in," he said, "and it's going to take a long time to dig our way out."
Gov. Bevin's pension proposal last fall sparked backlash and even protests from state workers and teachers unhappy with some of his suggested changes.
"This plan is our attempt to address many of those issues brought to us," House Speaker Pro Tem David Osborne, R-Prospect, said in a news release Tuesday evening. "We listened to the concerns, and this bill represents a compromise that will bring our pension systems to the appropriate funding levels over a 30-year period."
Senate Majority Floor Leader Damon Thayer, R-Georgetown, said SB1 will likely be assigned on Wednesday to the State and Local Government Committee, which is chaired by Sen. Bowen. He said he expects it to be put on that committee's agenda to be considered next week, to give people time to look over it.
You can read the full bill here.
Sen. Joe Bowen (R-Owensboro) now speaking from Senate floor about SB 1, his pension reform bill. "Failing to act is no option," he said. pic.twitter.com/0UmemSsCv0— Garrett Wymer (@GarrettWKYT) February 20, 2018