Experts Talk Past, Future of Kentucky's Pension Crunch
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Governor Matt Bevin has run out of time to call a special legislative session before regional universities and “quasi” state agencies must pay more towards Kentucky’s public pension system. But Bevin’s office still says there’s a “grace period” before the bill comes due.
Some lawmakers are on board with Bevin’s proposal to let the agencies pay lower pension contributions if they exit the pension system and pay their share of the state’s pension debt. But there are still questions over the proposal’s legality and how many votes it would take to pass.
Bevin originally said he would call a special session before the costs take effect on July 1st, but now he says it's likely to happen later this summer.
The affected agencies include the state’s regional universities — Eastern Kentucky University, Western Kentucky University, Murray State University, Kentucky State University and Morehead State University — as well as “quasi” governmental agencies like local health departments, rape crisis centers and mental health agencies.
Some of the organizations say that without relief, they will have to cut their services or even close.
Bevin’s office said agencies could avoid paying the increased costs if the legislature passes a bill by mid-August.
Kentucky Public Radio’s Ryland Barton talked to legislators and others about the system, and asked how some agencies may be affected. Our guests were:
- David McFaddin, Senior VP for Operations at Eastern Kentucky University
- Steve Shannon, Executive Director of the Kentucky Association of Regional Programs (which represents community mental health centers)
- Joni Jenkins, Democratic Representative — Louisville
- Jerry Miller, Republican Representative — Louisville
Rep. Joni Jenkins, a Democrat from Louisville, said the state would have to pay around $419 million to fill mandated services if “quasi” state agencies stop functioning. But Jenkins said she’s concerned about Gov. Bevin’s proposed bill, which would encourage employers to pull out of the system, freeze their employees’ pension benefits and move them into 401k-type plans.
“I am very concerned about the possibility of going into a special session and coming out with a bill that’s probably going to be taken to court,” Jenkins said, adding that the bill could break benefits guaranteed under employees’ inviolable contract.
Another issue is whether the bill would need a three-fifths majority vote to pass out of Kentucky’s House and Senate — a requirement for bills that spend or raise money when the legislature isn’t in its designated budget writing session, which takes place in even-numbered years.
Rep. Jerry Miller, a Republican from Louisville, said “this is not an appropriations bill and it is constitutional."
David McFaddin, senior vice president for operations at Eastern Kentucky University, said that depending on what is decided, the school may have to cut services for students.
“It’s quite frankly the most significant issue that we face from a budgetary standpoint, and has been for the last couple of years,” McFaddin said. “We’re so hopeful that policy makers will be able to come together.”
Join us next week for In Conversation as we listen back to episodes about youth vaping, vaccinations and the state of Louisville’s parks.