After being called into a special session by Gov. Matt Bevin, the Kentucky Legislature decided Tuesday to take no action on newly filed pension reform bills.
The surprise session was adjourned only days after the Kentucky Supreme Court on Dec. 13 struck down SB 151, which similarly sought to overhaul pension benefits in the state retirement system and had been signed into law in April by Mr. Bevin.
The matter re-emerged this week in the form of two bills that were introduced in the House on Monday by Republican state Rep. Jerry T. Miller. By Tuesday night, however, the special session convened by Mr. Bevin adjourned with state lawmakers deciding to take no action on the bills, said Rob Weber, a public information officer for the Legislature.
Of note, HB 1 removed provisions of SB 151 that required level-dollar financing of unfunded liabilities over a closed 30-year amortization period, using a five-year smoothed asset valuation method for all plans within $12.3 billion Kentucky Retirement Systems, Frankfort, states a handout on the proposed changes, obtained by Pensions & Investments.
HB 1 differed from SB 151 in that it stripped out a prohibition on putting unused sick days toward retirement. Also, a provision from SB 151 requiring KRS employees to choose between participating in their existing cash balance plan or a new 401(a) plan, did not make it into HB 1, the handout showed.
Whereas, "HB 1 is more related to the pension bill (SB 151) that was passed, HB 2 was related to funding issues," said Mr. Miller, who introduced both bills this week, in an interview.
HB 2 sought to amend Kentucky Teachers' Retirement System benefits so a 3% benefit factor for more than 30 years of service would be limited to years of service earned prior to July 1, 2024. The bill also stipulated that the County Employees Retirement System employer contribution rates not increase by more than 12% per year over the prior fiscal year from July 1, 2018, to June 30, 2028, a version of the bill posted on the Kentucky Legislature's website said.
On Dec. 13, the Kentucky Supreme Court ruled that SB 151 was unconstitutional because it violated a state law requiring legislation to be read three times before passage. Because the bill was passed in April without complying with the "three readings requirement," the legislation was ruled "constitutionally invalid and declared void," the court's 44-page opinion said. However, the court did not take a stance on the substance of SB 151.
If lawmakers want to revisit Kentucky pension reform law, they would have to wait until next year, and legislation would have to be introduced again, Mr. Weber said.
In a statement Tuesday night, Mr. Bevin said: "For the sake of our financial future, we must believe and demand that the General Assembly will return to Frankfort in January with renewed focus and determination to fully address Kentucky's pension crisis. I am grateful to those members of the General Assembly who came in good faith and attempted, over the past two days, to do the right thing. Despite the sincere efforts of many, the challenge still remains."