By Tom Latek
Kentucky Today
Hundreds of teachers, public employees and retirees jammed into the Capitol Annex on Wednesday, cheering and jeering news they did or didn’t like as a Senate committee discussed the public pension reform legislation.
After an hour of discussion, no vote was taken on the bill.
The Senate State and Local Government Committee met in front of the full house and an overflow crowd that watched the meeting on closed circuit television in three other committee rooms used to accommodate the audience.
Several major changes were discussed including lowering the cost-of-living adjustment for retired teachers to 1 percent until the Teachers Retirement System is 90 percent funded. The original bill cut the 1.5 percent increase in half for a dozen years.
Senate President Robert Stivers, R-Manchester, was unsure how long it would take to fund the system by 90 percent.
“It depends on the performance of the market and things of that nature,” he said.
“We could do this to bring the system into stability and do what we have done within the confines of the law.”
Also, in another change recommended, the so-called “supersizing” of legislative benefits will end. Starting next year there will be no reciprocity for lawmakers who move into another, higher-paying state position. This will not affect former lawmakers who have already moved into other state jobs.
“We think it was wrong, and we were originally going to claw back those legislators who had supersized their pension,” Stivers said. “But when you think about the legal aspects of it, we felt we would lose in court, so we are going to make it prospective, instead of retrospective.”
The bill also dials back how much state employees hired between 2003 and 2008 would pay for their retiree health benefits. The proposal last week had employees paying 3 percent of their salary, but the new bill has them pay only 1 percent.
No printed copy of the committee substitute is currently available as they are awaiting an actuarial study on the proposed changes.
After concerns were expressed by Sen. Dorsey Ridley, D-Henderson, committee chairman Sen. Joe Bowen, R-Owensboro, said he would not call for action on the committee substitute until it is distributed to members and they have an opportunity to examine the bill.
Republican legislative leaders said the bill would eliminate Kentucky’s unfunded pension liabilities, currently at more than $40 million, by cutting the retirement benefits for teachers and shifting costs to local governments.
Democratic Attorney General Andy Beshear said before the Senate committee was scheduled to review the pension bill that the proposed legislation would not withstand court challenges if it becomes law.
In a letter to lawmakers, Beshear said Wednesday the bill would break the inviolable contract between the state and its public employees because the bill would reduce or alter guaranteed benefits. He predicted the measure would draw numerous lawsuits if enacted and that the state would lose in court.