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New proposal presented to Public Pension Oversight Board Monday, but questions still remain

By Tom Latek
Kentucky Today

A new proposal to deal with the public pension for regional universities and quasi-governmental agencies was unveiled on Monday.

However, there is still no date for a special session of the General Assembly to deal with the issue, and disagreement about how many votes are needed to pass the bill.

The plan was presented to the Public Pension Oversight Board by State Budget Director John Chilton and Gov. Matt Bevin’s Deputy Chief of Staff Bryan Sunderland.

Bryan Sunderland, the deputy chief of staff for Gov. Matt Bevin, explains the new proposal for the public pension plan. (Photo by Tom Latek, Kentucky Today)

Among the changes:

• A non-severability clause was added, which basically says if a court finds one portion of the bill unconstitutional, then the entire 28-page legislation is void.

• Assets of a quasi-governmental agency will be pledged to help recover costs in case of a default by that agency.

• Failure to pay will result in no additional accrual of future benefits.

• Added language to ensure the 2020 General Assembly have the opportunity to revisit the issue, as provisions would not take effect until April of that year.

An earlier version of the bill indicated it was an appropriations measure, which under the Kentucky Constitution requires a supermajority, or 60 percent approval, of lawmakers in both the House and Senate. This version does not include appropriations language.

Sunderland believes they have the votes to pass the measure through both the House and Senate, but that the main issue is scheduling. “A lot of people are going a lot of places and doing a lot of things.”

He also said the July 1 deadline previously announced by the governor is unlikely to be met, but they still have some breathing room before the universities and quasi-governmental agencies must nearly double their pension costs.

“Employers would begin being charged the higher rate beginning July 1. That bill comes due in August. Not until after August 10 would they be considered delinquent,” Sunderland said.

House Minority Whip Joni Jenkins, D-Louisville, says she isn’t so sure that there are enough votes to pass the bill, according to the Kentucky Constitution. “Everything I read and what our General Counsel tells us is that in a non-budget year, any bill that raises or spends money takes 60 votes to pass.”

If only a simple majority of 51 votes passes the measure, Jenkins fears, “I think we run the risk of somebody filing a lawsuit, and everything stops at that point. I think that’s very dangerous for our quasi-governmental agencies.”

She also fears the so-called inviolable contract the state made with employees is violated in the bill. “They’re changing the retirement system on them, and it’s not the employee’s decision, it’s the employer’s decision.”

In addition to Kentucky’s regional public universities, the legislation would also affect 118 agencies such as local health departments, rape crisis centers and mental health clinics. The Kentucky Employees Retirement System is among the worst-funded in the nation.

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