The Kentucky General Assembly voted Monday to override a veto by Gov. Andy Beshear of a bill that would move new participants in the Kentucky Teachers' Retirement System, Frankfort, to a hybrid plan.
The state House of Representatives voted 63-31 on Monday to override Mr. Beshear's March 24 veto of the legislation, and the state Senate quickly followed with its own 25-13 vote in favor of the override.
The bill, originally passed by the general assembly on March 16, creates a new tier for teachers hired after Jan. 1, 2022.
Beau Barnes, deputy executive director and general counsel of the $23.2 billion pension fund, said in a March 17 email that under the new tier, a total of 17% in employer and employee contributions would go to the defined benefit side of the hybrid plan, and 4% (split evenly between employers and employees) would be contributed to the supplemental plan, which Mr. Barnes said would be a new 403(b) plan.
Mr. Barnes said the current contribution formula involves variable costs for the commonwealth of Kentucky, which must make variable contributions based on pension plan funding. The new tier is funded above 100%, and any savings in costs will go to a stabilization reserve account, from which the board can draw if the funding ratio for the tier falls below 100%, Mr. Barnes said.
The main intent of the changes is to provide a fixed cost for contributions and place the responsibility for any developing unfunded liabilities on reserves created by the overfunding, he said.
Mr. Beshear in his veto message said the bill "prospectively cuts teachers' retirement benefits, which will impair the Commonwealth's ability to attract and retain teachers, especially since the General Assembly has also refused to give teachers a raise."
The state Senate on March 16 had approved the bill 25-11 with amendments to an earlier bill the state House of Representatives had approved in February, and the House quickly followed with a vote of 63-34 in favor of the revised version.
Along with the creation of the hybrid plan for new hires, the bill also changes the ages and length of service after which teachers are permitted to retire. Currently, teachers at any age can retire with 27 years of service.
Under the passed bill, teachers could retire with an unreduced retirement benefit after age 57 with at least 30 years of service, at age 60 with at least 10 years of service and at age 65 with at least five years of service.
Crystal Staley, Mr. Beshear's spokeswoman, referred questions to his veto comments.