A publication of the Kentucky Center for Public Service Journalism

Pension reform takes center stage as lawmakers prepare to roll up sleeves for legislative session

By Tom Latek
Kentucky Today

State lawmakers return to work Tuesday with a lot of their plate – foremost being pension reform – during the 30-day session.

The Kentucky Supreme Court unanimously struck down public pension reform legislation passed by the 2018 General Assembly, saying lawmakers violated state law in the process used to approve the bill.

General Assembly House Speaker Pro Tem Davis Osborne, R-Prospect, says that issue will once again be front and center when they convene, but there will be much more.

“Certainly, some fixes to the tax reform bill will be on there, dealing with some non-profits’ re-seller issues,” he said. “There were unintended consequences or misinterpretations by the revenue department, so we will be dealing with those.”

In the wake of the Marshall County High School shooting last January, which left two students dead and 19 others injured, Osborne said school safety will be another priority. “School safety is very, very important issue to both the House and Senate. We will hopefully be dealing with that very, very quickly,” he said.

A legislative task force spent much of the past year studying the issue, conducting hearings at locations across the state.

Osborne says to expect some legal liability reform to be addressed as well.

Senate President Robert Stivers, R-Manchester, agrees public pension reform is a top priority. “It’s well documented that we have somewhere around a $40 billion unfunded liability in the pension systems. We’re going to have to address that, and funding can’t be the only solution.

“Any actuarial analysis says that maybe only 20 percent of the problem is funding,” Stivers pointed out. “If you take 20 percent of the $40 billion problem away, we still have a $32 billion problem, because of structural problems with the systems. So, it is a big issue we’ll have to deal with.”

Stivers said they also want to take a look at Senate confirmation of appointees. “One of the things we saw was the University of Louisville board got out of whack,” he said, pointing to actions revealed in federal court by some employees in the Administration of former Democratic Gov. Steve Beshear. “They were trying to put people in various places on various boards, so they could affect the contracting process for the purpose of giving kickbacks and bribes. We need to look at that.”

Stivers also said they will look at making reporting requirements for lobbyists to the executive branch the same as they are for the legislative branch of government. “We want to make things more transparent, so we don’t have another University of Louisville situation.”

A mechanism for sports gambling in Kentucky has been widely discussed and is the topic of at least two bills that will come before lawmakers in 2019. But Osborne says he’s unsure of the outcome. “I have yet to see a groundswell of support for it. I’ve just not seen anyone blazing a trail for it. That includes both on the legislative side and the business side.”

Sports gambling is not a cure-all for the state’s finances, Stivers said. “Las Vegas only generated something like $12 million in tax revenue, and everything is on the books out there for you to bet on. Our estimates are well less than that from what I’m seeing.”

Stivers noted no one has heard from the NCAA on the issue and most of the illegal gambling in Kentucky is on college sports.

“There may be a different perspective from them because you’re dealing with college athletes who don’t have professional contracts,” he said. “And if you think about this, what does it mean for them to miss the free throw or drop the pass if they don’t have at risk a large professional contract? There have been federal indictments over show contracts with parents, what doe s a gaming situation create for them?”

House Minority Leader Rocky Adkins, D-Sandy Hook, says he disagrees with the Republican majority that changes to the public pension are needed, saying they haven’t given the bipartisan reforms enacted in 2013 enough time to work.

“If you look at what the pension systems are reporting now,” Adkins said, “the Kentucky Retirement System has earned over $2.4 billion over the last two years. The Kentucky Teacher Retirement System year before last gained 15.4 percent from their investments, last year, 18.5 percent. So, what we have is the pension systems are saying, ‘keep the reforms of 2013, find the funding as we move forward.’ The pension systems are back on the right track, and they are recovering in the right direction.”

Adkins said the 30-day sessions are not meant to see a thousand bills introduced, so lawmakers should concentrate their efforts on just a few things.

“I would think we need to have a very controlled session, looking at issues like the drug epidemic that we have, a very bipartisan issue,” Adkins said. “We can look at things like school safety, which should be very bipartisan, as we move forward. There ought to be three, four or five very specific areas that we can work on in a bipartisan way.”

Adkins says while the Democratic minority will continue to act as the loyal opposition, “We’re willing to reach across the aisle and reach compromise on issues that we believe are really ones where we can put people over politics. Those are the things we should work on in the session.

“The short session was intended to be only for clean-up work. Tow make modifications and adjustments where needed, and not handle the short session like a 60-day session, because it’s not.”

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