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Kentucky Teachers Crowd Public Hearing Of New GOP Pension Bill

Ryland Barton

Hundreds of teachers and other state employees packed the Kentucky Capitol on Wednesday as Republican lawmakers presented their new plan to overhaul the state’s ailing pension systems.

Supporters of the measure say it would save the state $4.8 billion over the next 30 years by requiring the legislature to put more money into the pension systems and reducing benefits to current and future retirees.

Janet Sogar, a retired teacher from Florence, said she has a hard time encouraging young people to become teachers because of proposed cuts to future teacher pensions.

“There is so much in this bill which is not favorable to the economic security of future teachers, as well as current teachers and even retired teachers, that the scale would be tipped in favor of suggesting that they switch to a less time-consuming and more lucrative profession,” Sogar said during the meeting of the Senate State and Local Government Committee.

Senate Bill 1 was filed last week after months of negotiations among Republican leaders of the state legislature.

The bill would move most future workers, including teachers, into what’s called a hybrid cash-balance retirement plan.

State workers who have non-hazardous jobs have been enrolled in a similar system if they were hired after January 1, 2014. However, this bill would no longer guarantee that employees’ retirement accounts grow by at least 4 percent every year — it would only promise not to lose money.

Teachers currently receive a defined benefit pension — meaning the state promises to send a check every month after retirement until death based on number of years worked and highest salary — but new hires would receive the cash balance plan.

Sen. Joe Bowen, a Republican from Owensboro and primary sponsor of the bill, said teachers should welcome the changes.

“Look, at the end of the day we’re working to save their systems,” Bowen said. “That’s the whole premise of the bill. We want to save these systems, we don’t want these systems to languish and fail.”

Retired teachers would have annual cost of living adjustments reduced from 1.5 percent to 1 percent until the teacher pension fund is 90 percent funded.

The proposal would also cap accumulated sick leave as of July 1 of this year for the purposes of determining retirement eligibility or benefits — future state workers wouldn’t be able to use their accumulated sick days as credit to more quickly reach their date of retirement.

Bowen announced that the bill had already been revised and that it would be voted out of committee at a later date.

Beshear Weighs In

Before the meeting on Wednesday, Attorney General Andy Beshear said that several parts of the bill would be illegal if they passed into law.

“Sadly, Senate Bill 1 breaks that contract, takes away many retirement rights that were inside that inviolable contract,” Beshear said.

In a letter sent to state lawmakers, Beshear said there 21 ways in which the bill would violate the so-called “inviolable contract”— a guarantee that the state will pay workers’ benefits as promised when they were hired.

Senate President Robert Stivers, a Republican from Manchester, said that many of the changes in the newest version of the bill were aimed at ensuring the bill is on safe legal ground.

“It’s a lot of it,” Stivers said. “I don’t want to ever classify that that’s the sole and single decision, but that’s a lot of it. We want to make sure that we are in some place that’s legally defensible.”

The proposal is a departure from Gov. Matt Bevin’s plan to move most future and some current state workers onto 401(k)-style retirement plans, which have no guaranteed rate of return and could even lose money during a market downturn.

The new plan also doesn’t include Bevin’s plans for current state workers to be transitioned into 401(k)s once they reach 27 years of service or for all employees to contribute three percent of their salaries for the retiree health program.

Ryland Barton is the Managing Editor for Collaboratives. He's covered politics and state government for NPR member stations KWBU in Waco and KUT in Austin. He has a bachelor's degree from the University of Chicago and a master's degree in journalism from the University of Texas. He grew up in Lexington.

Email Ryland at
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