A Kentucky pension relief bill backed by Republican Gov. Matt Bevin passed the House in a 52-46 vote Monday.
House Bill 1, which passed during a special session called by Mr. Bevin, allows quasi-governmental agencies, such local health departments, domestic violence shelters, rape crisis centers, child advocacy centers, and other state-supported universities and community colleges, to leave the $2 billion Kentucky Employees Retirement System for Non-Hazardous employees, if they are unable to meet rising pension contribution costs or elect not to.
HB 1 also freezes the employer contribution rates of the 121 quasi-governmental agencies at 49.47%, forcing public employees hired since 2014 into a defined contribution plan. Without the bill, the entities, some of which are struggling to remain open, would pay the full actuarially required contribution rate that is already at 83%.
In April, Mr. Bevin vetoed an earlier pension relief bill, House Bill 358.
Kentucky lawmakers in the House and Senate passed the pension relief bill on March 28, but Mr. Bevin said in an April 9 statement that he was vetoing the bill, House Bill 358, "with the confidence that the legislature will make needed corrections."
There are only minor differences between the vetoed bill and HB 1, which are mostly administrative, said David Eager, executive director of the $17 billion Kentucky Retirement Systems, Frankfort.
HB 358 inadvertently stated that employees at agencies leaving KERS, would no longer be eligible to join the pension system starting Jan. 1 2019, instead of the intended date, Jan. 1, 2020, Mr. Eager said.
On Monday, the Kentucky Government Retirees, an advocacy group representing 15,000 Kentucky Retirement Systems retirees and active employees, issued a statement that it was "deeply disappointed that the House of Representatives barely passed a bill that betrays the pension promise for thousands of dedicated public servants."
The group said it opposed the bill because it would increase liabilities and create credit risk for the pension system, as well as threaten the contract rights of quasi-governmental employees. "We can only hope the Senate will defeat HB 1 so the legislature can consider a better alternative," the statement said.
The Kentucky Senate is expected to vote on HB 1 as early as Wednesday.