By Tom Latek
Kentucky Today
At the end of a long and emotional day, Republican lawmakers used some fancy legislative footwork to push through a pension overhaul that keeps benefits for most workers but still will leave the state with enormous debt.
With hundreds of teachers on the outside protesting loudly, chanting “Shame on you!” and vowing to have their say at the ballot box, the Senate voted 22-15 to pass the measure. The House earlier voted 49-46 with 11 Republicans joining 35 Democrats in opposing the bill.
How the Senate voted on the pension overhaul bill Thursday night. (Photo by Tom Latek, Kentucky Today)
The 291-page proposal came out of the House State Government committee Thursday afternoon to the surprise of many and with no time to read it. The eight-hour debate included some fiery speeches went late into the evening but by 10:30 p.m. the House and Senate had voted for it and sent it on to the governor’s desk.
Gov. Matt Bevin tweeted his support for the bill, saying public workers owe “a deep debt of gratitude” to lawmakers who voted to pass it. His signature will make it official.
Teachers were not happy with the decision. Fayette County Public Schools, the state’s second-largest district, announced it will close Friday after the vote because more than a third of its employees would be out. Clark and Jessamine school districts also said they would be out Friday because of teacher absences.
In Northern Kentucky, the Campbell County School District, Carroll County School District, Gallatin County School District and Dayton Independent Schools all announced closure Friday due to a shortage of teachers.
Carroll County School District Assistant Superintendent Doug Oak posted a statement attributing the closure to pension reform legislation.
The Carroll County School District is closed today, March 30, 2018. An unusually high number of teachers called in sick, and the district does not have enough substitute teachers to operate its schools.
“We do believe that our being closed today is related to the passage of the pension reform legislation,” said Oak. “We understand that our teachers are upset. We understand that they feel betrayed by this legislative process.”
The Carroll County School District’s spring break begins Monday, April 2.
“We expect to have school as scheduled on Monday, April 9,” Oak said. “Currently, the last day for students is June 1, and graduation is on June 3. After today’s closing, the board will need to review the calendar to see if any changes need to be made.”
Rep. John “Bam” Carney, R-Campbellsville, presented Senate Bill 151, a bill that originally dealt with wastewater services. However, he introduced a committee substitute that gutted the bill, and replaced it with provisions similar to Senate Bill 1, the pension reform bill that stalled and was sent back to a Senate committee earlier this month.
“This guarantees a solid retirement for all public employees, including retired, current and future workers, while also giving future workers the chance to capitalize on the type of market returns we’ve seen in the past few years,” he told the panel.
Carney said the bill had minimal benefit changes to any current workers with changes made after listening to stakeholders.
“The only change to current public employees deals with future unused sick time,” Carney said. “This means unused sick days cannot be tacked on to years of service for retirement credit at the end of this fiscal year.”
The bill removes some of the most criticized parts of previous proposals. Current and retired teachers, who are not eligible for Social Security benefits, would still get annual raises of 1.5 percent in their retirement checks. And current workers would not have to work longer to qualify for full benefits.
However, new hires would be moved to a hybrid plan. They would be guaranteed to get back money they and taxpayers contributed to their retirement accounts, plus 85 percent of any investment gains. The state would keep the other 15 percent.
The bill would also remove new teachers from an “inviolable contract” that would protect them from future benefit changes.
Rep. Derrick Graham, D-Frankfort, objected to the committee being asked to act upon the bill without having seen it first.
“This is very unfair to ask the members of this committee to vote on a bill that is going to impact thousands of Kentuckians, when they bring it in at the last hour in the last days of the General Assembly,” he said.
The bill passed the committee on an 11-7 vote and was immediately taken up on the House floor where House Minority Leader Rocky Adkins, D-Sandy Hook, questioned the legality of it, asking, “Does it contain an actuarial analysis as mandated by statute?”
House Majority Leader Johnathan Shell, R-Lancaster, responded by saying, “We have a Supreme Court ruling which states, ‘It is not the responsibility or purview of the court to establish and interpret the rules under which the legislature conducts its business.’”
Several members objected to being asked to vote on the bill without having seen a copy of it.
Many of the same questions were repeated in the Senate that were asked in the House debate.
Sen. Jared Carpenter, R-Berea, called it an attempt to preserve the pensions for future public workers while honoring the obligations to current workers.
“I think this is fair,” he said. “It is reasonable. It is the right thing to do. I think just to say ‘no’ for the fact of saying ‘no’ is just trying to win a political party or political debate. I got friends on both sides.”
Senate Minority Leader Ray Jones, D-Pikeville was among those who opposed.
“If our forefathers who served in the halls of the state Senate and state House of Representatives could see where we are as a commonwealth, they would be appalled,” Jones said. “This is not the way democracy is supposed to work. Democracy depends on the free exchange of ideas and consideration of the rights and opinions of others.”
Carney said lawmakers expect it to save $300 million over the next 30 years. However, Kentucky is at least $41 billion short of the money it needs to pay retirement benefits over that same time.
While the budget conference committee will meet on Friday, the full General Assembly is in recess until April 2.
Legislative leaders decided to use the snow day from January to act on more legislation. They will then recess until the final two veto days, April 13 and 14.
The NKyTribune contributed to this story
The courts will ultimately rule on the legality of this slimy bill and I believe they will find it unconstitutional on the grounds of its content and also the process used to pass it. However the courts rule, ultimately, the fate of teacher and public employee pensions plans rest in their own hands. If we sit back and accept this with no decisive action, we will have failed as stewards of our profession and as role models for our students who, as I write, are taking political actions on their own pursuant to safety issues. Teachers and public employees should follow the example their colleagues in West Virginia just completed and close this state down. They have it in their power. The question is do they have the courage and the will?
Every Republican Senator from northern Kentucky voted against the teachers, i.e. Schroeder, Thayer, McDaniel and Schickel. The Representatives did the same including my rep. St. Onge. I will remember that in November. Hope you do also.
SB 151 which passed the House yesterday has things it does and things it will Not do. The following is pointed out by State Representative Jason Petrie. The Pension Bill is NOT all gloom and doom as some teachers and the KEA say it is.
Retired Teachers: There are no changes to existing retirees, including no change to COLA’s.
Active Teachers: Active teachers will remain entitled to their pensions with no changes. No changes in age, no changes in benefits, and no changes to the High 3. The only change for active teachers is a cap upon sick days which can be used to enhance salary before retiring. Sick days accumulated prior to the end of 2018 can still be used to enhance salaries for retirement cash benefits and can be “cashed in” with local school boards for payment (about 30% of value). Sick days accumulated after the end of 2018 will be used only for cash value with local school board. The change to sick days is taken directly from Superintendent’s Shared Responsibility Plan which many have endorsed and requested. No other changes to active teachers are being made.
New Hire Teachers: New hire teachers will be placed in a Cash Hybrid plan similar to all other retirements systems, except this plan guarantees no loss and includes an approximate 18% contribution. As the plan grows the participant receives the gains, but does not have to suffer a loss through any market downturn. The guarantee against loss and the heightened contribution is to offset the lack of Social Security. By most accounts, such a plan provides a higher payout over lifetime of about $12,000.00 more than the current pension plan. This plan for new hires also is portable and inheritable.
Method of Bill Passage. The method of passing the bill is not new. After about February 16, 2018 no new bills could be filed. It appeared that necessary pension reform had stalled in the Senate. So, because the details of SB 1 had been debated and analyzed for weeks, the House repurposed an existing Senate bill and used much of the same language from SB 1 but removed the terms to which we could not agree such as reducing COLA’s, requiring participants to work longer, etc.
Death Benefit: A $5k death benefit is replaced with a $20k life insurance policy.
Thus, under SB 151 retirees continue to receive their existing pensions without modification. New teacher hires receive a no-loss-guarantee hybrid cash plan with an approximate 18% match which over normal time will payout more, is portable and inheritable. Most importantly, funding methods were put in place to make sure the $60 billion unfunded liability is paid down over a set time period and require future legislatures to continue to pay all that is required as we are doing in this budget. This plan allows the major credit rating agencies, which have been consulted, to level out the Commonwealth’s credit rating which has been on a downward slide for nearly 12 years.
I promised to address pension reform to strengthen the systems and secure benefits for those in the systems. SB 151 does that. While I have never seen a perfect piece of legislation, the bill accomplishes all of the major goals in a way that no prior bill has been able to do.
Sincerely,
Jason Petrie
I agree with Mr. Petrie that the new legislation hurts the new crop of educators much more than existing teachers. The result is that new teachers are going to be much harder to recruit next school year. Mostly this is going to affect teachers close to state lines more than those near the center of the state. According to a map I’ve seen, Indiana still relies on Social Security to compensate retirees. Tennessee does the same. If I were a new teacher or early in my career, I would trust the federal government much more than the state government to help me in my retirement years and would seek employment accordingly.