Pension Transparency Legislation Returning To Frankfort In 2017
Republican lawmakers will seek fixes to the state’s ailing pension systems during the upcoming legislative session. And with commanding majorities in both the state House and Senate, they won’t have to listen to Democrats if they don’t want to.
It’s also increasingly likely that Gov. Matt Bevin will call a special legislative session over the summer to address tax reform and pension issues, opening the door for deeper changes to the pension system.
Two proposals that failed earlier this year will likely be resurrected during the General Assembly: a sweeping “pension transparency bill" that would make pension contracts, fees and investments public; and another bill that would make lawmakers’ public pension information subject to open records requests.
Sen. Joe Bowen, an Owensboro Republican, said the pension transparency bill would be the “marquee” piece of legislation addressing pension issues this session.
“I think we’re going to have a resolve amongst the majority in both the Senate and the House to resolve these pension challenges. We’ve got to get there,” Bowen said.
Bowen’s bill would also require the pension systems to operate under the same purchasing guidelines as state government and give the Senate power to review the governor’s appointees to the state pension agencies’ boards.
Worst-Funded Pensions in the U.S.
The proposal — slated by GOP leaders to be a priority again — comes after years of scrutiny into Kentucky pension agencies' use of hedge funds despite poor performance and hefty, often secretive fees for investment managers.
The bill passed the state Senate this year but languished in the House, the control of which has since flipped from Democrat to Republican.
Combined, Kentucky has the worst-funded pension systems in the nation, with an unfunded liability estimated to be about $33 billion.
During this year's General Assembly, Bevin led the legislature to put more money into the pension systems than ever before. The money came from spending cuts over the next two years.
The main pension fund for state government employees has 16 percent of the money it needs to make future payments to retirees, down from 19 percent last year. The teachers' pension fund has 55 percent of the money it needs.
Meanwhile, the pension fund for lawmakers is 79 percent funded — a point highlighted by supporters of the bill to reveal lawmakers’ pension information.
Yet only 350 current and former legislators have pensions managed by Judicial Form Retirement Systems, which also serves state judges. Combined, the pension systems for state employees and teachers manage pensions for nearly 500,000 people combined.
Bowen still says the public should know how much lawmakers are earning in state pension benefits.
“I mean, they’re paying the bill. If somebody’s getting a really rich benefit, the public ought to know,” Bowen said.
Lawmakers have come under fire for drawing larger pension checks by moving on from the legislature to more lucrative jobs in state government. A law passed by the General Assembly allows legislators to enhance their benefits this way.
The legislative session starts Jan. 3.