The Kentucky General Assembly quickly approved Thursday a new pension reform bill that includes placing future teachers in a new cash balance plan.
Under the bill, which passed the House and Senate on Thursday, teachers hired after Jan. 1, 2019, will be enrolled in a cash balance plan instead of the existing defined benefit plan at the $18.1 billion Kentucky Teachers' Retirement System, Frankfort, according to bill documents.
Meanwhile, cash balance plans will be maintained for other current and future employees that make up the separate $17.4 billion Kentucky Retirement Systems, Frankfort. However, current and future KRS participants will have the option of participating in a new 401(a) defined contribution plan. Under the 401(a) plan, employers would contribute 4% and workers, 5%.
Thursday's pension reforms, which were tacked onto a bill that initially dealt with wastewater-related services, also reset the 30-year amortization period to pay off KRS' unfunded liabilities, and dictate that unfunded liabilities be paid off using a level-dollar amortization method year rather than a percentage of payroll. Other changes in the bill include a prohibition on putting unused sick days toward retirement.
Reductions to teachers' cost-of-living adjustments, which were included in an earlier version of the bill, were excluded from Thursday's version. The cash balance plan for future teachers and optional 401(a) plan for KRS employees were called for in the earlier version of the bill.
A spokeswoman for Kentucky Attorney General Andy Beshear said Friday that Mr. Beshear intends to file a lawsuit over the pension reform bill.
In a video on his Twitter page Friday, Mr. Beshear argued that the legislation violates workers' “inviolable contract” by reducing their rights and benefits.
Mr. Beshear also condemned lawmakers for passing a bill that lacked an actuarial analysis and was not subject to public comment or testimony and for not allowing sufficient time to fully digest the changes before the bill went to a vote.
Advocacy group Kentucky Government Retirees posted a statement on its Facebook page Thursday opposing the bill.
"Introducing a cobbled-together pension bill grafted onto a sewage bill in the waning days of the session without actuarial analysis and an opportunity for meaningful feedback is an insult to stakeholders," said Jim Carroll, president of Kentucky Government Retirees, in the statement. "The latest version of the pension bill assaults the contract rights of most KRS-covered employees. There is no reason to believe it will produce significant reduction in liabilities. KRS stakeholders remain adamantly opposed to changes to a pension system that was comprehensively reformed just five years ago."
David Eager, interim executive director for KRS, said in a telephone interview that several schools were closed Friday after teachers, angry about the bill, did not come into work.
Gary Harbin, executive secretary of KTRS, could not immediately be reached for comment.
In October, Gov. Matt Bevin's office pegged total unfunded liabilities for KRS, KTRS and the $327 million Kentucky Judicial Form Retirement System, Frankfort, at $64 billion. A spokeswoman for Mr. Bevin could not immediately be reached for comment on whether he intends to sign the bill.