(Updated March 1, 2013)
The Kentucky House of Representatives passed an amended pension reform bill Wednesday that would keep new state employees in a defined benefit plan in the $14 billion Kentucky Retirement Systems, Frankfort, but the Senate later rejected that measure.
On Friday, the Senate did not concur with the House's bill, and the House refused to receive the latest proposal from the Senate. The Senate also had rejected a bill from the House that would have provided a funding mechanism to help pay the full actuarially required contribution to KRS.
In late February, the Senate passed, by a 33-5 vote, a wide-ranging reform bill that included placing all new hires in a hybrid cash-balance plan. The Senate bill also incorporates other reforms originally proposed by a public pension task force last year, such as requiring the state to pay the full actuarially required contribution starting next fiscal year and eliminating all cost-of-living adjustments for retirees.
The House version would require the pre-funding of COLA increases for retirees by the General Assembly and allow the state to modify benefits and pension eligibility for employees hired after July 1, 2013.
The House on Wednesday also passed a bill for a funding mechanism to create a “pension sustainability trust fund” through revenue from lottery games and tax revenue on horse-racing machines. However, the Senate rejected that bill on Friday.
House State Government Committee Chair Brent Yonts, a Democrat, said full funding of the ARC is estimated to cost about $100 million a year in general fund dollars. The funding mechanism bill passed would allow the trust fund to collect an estimated $73.5 million by 2019, and more in subsequent years.
“After these endeavors mature, in about six to eight years, it pretty well takes care of itself from there on out,” said House Speaker Greg Stumbo, a Democrat, in a news release.
KRS had about $13.85 billion in assets as of June 30, 2012, including insurance funds, with $18.1 billion in unfunded liabilities for a funded status of 43.4%.
William Thielen, KRS executive director, previously said eliminating the automatic COLA and paying the full ARC will greatly improve the funded status of the system.