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Kentucky Lawmakers Still Mum On Pension Changes, Special Session

Kevin Bratcher holds papers at desk during committee meeting.
Legislative Research Commission
Rep. Kevin D. Bratcher, R-Louisville, presents House Bill 3, a bill geared toward juvenile justice reform before the House Judiciary Committee.

Lawmakers are still keeping tight-lipped on possible changes to the state’s pension systems, saying they’re still privately trying to get consensus among the Republican majority in the state legislature.

Gov. Matt Bevin has promised to call a special legislative session later this year for lawmakers to pass a bill that would make changes to retirement benefits in order to address the state’s massive pension debt.

But Bevin and lawmakers have mostly been non-committal about what changes they’ll make.

“I’m going to wait until we get to that point of being able to say in a comprehensive way, publicly, where we are,” said House Speaker Jeff Hoover during an impromptu news conference on Wednesday.

“I do think once we do that there will be a big sigh of relief from folks all over Kentucky.”

Many state workers and retirees were alarmedby a state-sponsored consultant’s recommendations last month that called for weakening pension benefits and shifting future state employees into 401(k) style plans.

Such a move would address the state’s current pension liability and ease its obligations in the future. But advocates say that changing benefits for employees currently in the system would violate the state’s contractual promise to honor benefits as they’re laid out when employees are first hired.

Bevin said in a recent interview with conservative group FreedomWorks that he supports the idea of moving future employees from pension plans that guarantee benefits based on years of employment to the 401(k) plans.

"You cannot have a system going forward that is a defined benefit system for people not yet in the system," Bevin said. "You just can’t do that because there’s not enough workers. There used to be seven workers for every retiree."

The funds managed by the main pension systems in the state — Kentucky Retirement Systems and Kentucky Teacher Retirement Systems — were nearly fully funded in the early 2000s. Now, the largest segment of KRS is only 14 percent funded — a $13.3 billion unfunded liability — and KTRS is short about $14.5 billion.

The shortfall has put a massive strain on the state’s budget. The systems have requested that the legislature set aside about $5.4 billion for the funds over the next two years, about a quarter of the state’s entire budget.

Meanwhile the state already has trouble bringing in enough tax revenue to cover obligations.

Leaders of the Republican-dominated legislature have been hesitant to seek out new revenue for the state, though Bevin earlier this year advocated for reforming the state’s tax code to bring in more revenue.

Senate President Robert Stivers said lawmakers have been focused on reducing spending.

“We really haven’t talked about revenue,” Stivers said. “We’ve talked about what the expenditure levels are and the costs to the system and what we need to put into it to make it actuarially sound.”

Lawmakers said that an agreement on pension changes could come in the next week or two and a special legislative session might come in early November, though only the governor can call the special session.

House Majority Floor Leader Rocky Adkins, a Democrat from Sandy Hook, said the governor should consider taking up the changes during the next scheduled legislative session, which begins in January.

“I would caution this governor not to call a special session until he has the votes," Adkins said. "Until he’s assured that he can bring the membership in and pass whatever legislation it is that he may have."

It costs more than $60,000 per day for the legislature to be in session.