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Pension bill passes in waning moments, allows public universities, agencies to opt out of KERS

By Tom Latek
Kentucky Today

In the waning moments of the 2019 General Assembly, lawmakers passed public pension legislation that will affect the regional public universities and quasi-governmental agencies, such as health departments, who are in the Kentucky Employees Retirement System.

House Bill 358 was changed by the Senate and the House would not agree to the Senate version, so a free conference committee met to hammer out an agreement that was reached late Thursday evening. That led to both chambers agreeing to the free conference committee report.

The bill provides that on June 30, 2020, the quasi-governmental agencies and universities would cease participating in the KERS, unless the board of each entity votes by the end of this year to stay in the system.

James Tipton, sponsor of the pension bill, listens to the debate. (Photo by Tom Latek/Kentucky Today)

If they remain, their payments are frozen for one year, but they will have to pay the full retirement contribution rate starting July 1, 2020.

The entities opting out of the system will have Tier III employees and all new hires transfer become part of a defined contribution plan, similar to a 401 (k).  Tier I and II employees will have the choice to continue accruing benefits under the current system or opt out for a defined contribution plan as well.

Those entities who opt out would be responsible for their unfunded liability portion, which they could pay off in a lump sum or in monthly installments until the unfunded liability is paid off.

Rep. James Tipton, R-Taylorsville, a member of the free conference committee and who presented the bill to the House, warned what would happen if the employer failed to make their payments.  

“If they are delinquent for 30 days or more, the employer operations and administration will be taken over by the Finance and Administration Cabinet, until they resume making the payments,” he said.

If the employer is delinquent, he added, “the benefit payments to retirees and beneficiaries would stop until payments are made.”

Rep. Jerry Miller, R-Louisville, reminded his colleagues, about the bottom line. “There is no perfect bill, but this bill accomplishes a lot of good.”

“In these days when we are facing a Hepatitis A crisis, we cannot afford to jeopardize the continued functioning of our health departments. Regional mental health centers are critical to making sure the school safety bill that we passed does what we hope it will do and make schools safer.”

Rep. Chris Harris, D-Forest Hills, opposed the measure. “We need to vote this bill down and we need to come back and revisit it.”

Harris wondered aloud: “Why can we pass millions of dollars in tax breaks to wealthy corporations, yet we can’t find the money to fund school safety?”

Rep. Derrick Graham also spoke against it, given the timing of when the issue was addressed. “This is one of the most important issues that we face, and yet it is the last thing we are voting on this evening.”

The bill passed 58-39 and now heads to Gov. Matt Bevin.

After the vote, House Speaker David Osborne, R-Prospect, said he was pleased with the result.  

Since the bill was passed on the last day of the session, lawmakers would not be able to override a gubernatorial veto.

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