Pension reform bill passes Kentucky Senate Committee

07 Feb

Written by Mike Wynn FRANKFORT, KY. — A bill to overhaul the state’s troubled retirement system cleared a first hurdle on Wednesday, passing the Senate State and Local Government Committee on a unanimous vote. Senate Bill 2, sponsored by Majority Floor Leader Damon Thayer, calls for full funding of pension plans at Kentucky Retirement Systems by fiscal year 2015, a move that would cost more than $300 million in additional funding in the first year. The legislation also would eliminate automatic cost-of-living adjustments in retiree benefits and create a hybrid retirement plan for future hires that combines elements of traditional pensions with the 401(k) approach used in the private sector. Thayer, R-Georgetown, said the bill could come to the Senate floor for a vote as early as Thursday. “This is neither a Republican nor a Democrat issue,” Thayer told the committee during an hourlong hearing. “This is an arithmetic challenge, and for us, the math quite simply does not add up.” Still, key lawmakers indicated that the bill is likely to face serious challenges in the House. House Speaker Greg Stumbo, D-Prestonsburg, said the majority of representatives want a plan to pay for the changes and that some believe revenue from economic growth would allow Kentucky to retain its current pension plan. The House is considering a variety of funding options, Stumbo said, but he declined to discuss the details. Kentucky Retirement Systems faces more than $18 billion in unfunded liabilities — part of the $33 billion in unfunded liabilities for all of Kentucky’s pension systems combined. Proponents say reforms are desperately needed to secure benefits for retirees and workers and protect taxpayers from a financial crisis. Thayer also contends that lawmakers can hammer out a funding deal when the legislature begins its biennial budget process next year. But critics argue that the bill will not achieve meaningful reform without a dedicated funding stream to pay for the changes. They also say repealing benefit adjustments and changing the plan for new hires would hurt current employees and retirees. Steve Barger, coordinator for the Kentucky Public Pension Coalition — a group of about 20 unions and advocacy organizations — said a funding solution is “critical” for the 2013 General Assembly and that he expects the bill to change once it reaches the House. Rep. Brent Yonts, a Democrat from Greenville, who was planning to file a pension reform package in the House, said Wednesday that lawmakers are still piecing together the skeleton of a bill and may file amendments to SB 2. Revenue estimates are changing too fast for lawmakers to settle on an approach, he said. “Our strategies are changing somewhat,” Yonts said. “The same theory is there. … We’ve got to deal with it this time. If we don’t the public will be outraged, I think. And we have to say how it is to be funded.”

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