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New Kentucky GOP Pension Bill Diverges From Bevin Plan

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.

A new proposal to overhaul Kentucky’s public pension systems has been filed in the state Senate.

Though full details of the proposal hadn’t yet been unveiled by Tuesday evening, Senate Republican leaders say it differs greatly from a version pushed by Gov. Matt Bevin last fall.

Sen. Joe Bowen, a Republican from Owensboro, said Bevin’s proposal would have cost the state more by shifting most future and some current workers into 401(k)-style retirement plans, known as "401(a)s".

“We backed off the 401(a) plan in the proposal released last year because, after actuarial analysis and after number-crunching, it was actually not going to be as efficient as we perceived,” Bowen said.

“In a budget crisis where drastic cuts will be made to services, it simply was not an option, even for conservatives who wanted to make the move to private-sector style plans based on principle," he added.

Kentucky has one of the worst-funded pension systems in the nation and Republican leaders have been searching for ways to reduce the state’s pension liability by tweaking benefits to state workers.

Unveiled last fall, Bevin’s proposalwas met with widespread backlash from state employees.

The Senate Plan

The new bill does not include Bevin’s requests for all state employees to contribute three percent of their salaries to the retiree health program or the suspension of retired teachers’ cost of living adjustments.

Senate President Robert Stivers said the new bill would still reduce teachers’ cost of living adjustments from 1.5 percent to .75 percent for the next 12 years.

Future teachers would also be enrolled in a hybrid cash-balance retirement plan instead of the more-generous defined benefit plan currently used, Stivers said.

New state workers who don't have jobs considered to be hazardous would also be enrolled in the cash-balance system, just as they are now.

State workers wouldn’t be able to use their unused sick days to help them qualify for an early retirement.

Bowen said Bevin was kept informed about the pension bill discussions, but it was written by lawmakers.

“We wanted legislators to write a new pension plan because they are the ones, we are the ones, hearing most-directly from our teachers, from our state employees, from all of the stakeholders,” Bowen said.

Senate President Robert Stivers and House Speaker Pro Tem David Osborne announced they will answer questions about the bill, which will be published Tuesday evening, during a news conference on Wednesday morning.

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