Gov. Matt Bevin, House Speaker Jeff Hoover and Senate President Robert Stivers held a press conference Wednesday morning in which they outlined 10 highlights of their plan to “save” Kentucky’s troubled public pension plans, though the legislation to implement this plan has not yet been completed and no date has been set for the state legislature to take it up.
The top three Republicans in state government each shared 10 bullet points from their plan, vowing that it would “meet the legal and moral obligations owed to current and retired teachers and public servants,” while creating a new funding formula that requires paying “hundreds of millions more” into each plan beyond just the actuarially required contribution.
Bevin said that the bullet points were crafted after conducting numerous meeting over the past few months with legislative leaders and stakeholders, and with the release of the plan “we have delivered on the promise” to protect the benefits of current public employees and retirees. He concluded the press conference by saying “this is a good day for the workers of Kentucky.”
Despite months of behind-the-scenes work, Bevin said that the pension bill to be taken up in a special session this fall had not been completed or scored, but said that it would be “soon.” Asked when he would call the special session — which was expected to happen this month — Bevin answered “when we’re ready.”
Hoover went through several of the plan’s bullet points, including that it would not increase the full retirement age for current public workers, and there would be no clawbacks or reductions to pension checks for those already retired. Noting that future non-hazardous government employees and teachers will be enrolled in 401(k)-style defined contribution plans instead of the current defined benefit plans, Hoover said these new plans would provide “comparable” retirement benefits.
For teachers, Hoover noted that retirement-age teachers would receive a three-year window to remain in their defined benefit plan.
Stivers said that future hazardous employees — including first responders — will continue in their same defined benefit plans, while legislators will not only have their defined benefits plan stopped, but will be moved into the same defined contribution plan as other state employees under the Kentucky Retirement Systems. While observers had questioned whether Bevin’s bill would break the inviolable contract of workers, Stivers said that the provisions of the pension plan are “legally defensible.”
Bevin closed the bullet points by saying that the provisions of the eventual bill will not go into effect until July 1 of next year, and that these changes would improve the state’s currently declining credit ratings.
Taking questions from reporters, Bevin said that new teachers would now be in a 401(k)-style plan, but would not be enrolled into Social Security, as was recommended by a consultant report in August. Bevin said this was the preference teachers’ unions that his administration consulted with when making the plan.
Though well over 100 city and county governments across the state — including Louisville Metro Government — have passed legislation calling on the pension plans of local workers to be separated from the troubled plans in KRS, Bevin said his plan did not include a “#FreeCERS” provision, calling such a move irrational.
While the bill itself has not been completed, Hoover suggested once it is ready that House committees may take up public discussions on the legislation before the special session begins.
Documents with additional details about the governor’s pension plan were given to reporters after the meeting, including the provision that cost of living adjustments would be suspended for five years for current retired teachers and would not begin until five years after current teachers retire.
Jim Carroll of Kentucky Government Retiree issued a statement expressing appreciation for the efforts of Bevin and legislative leaders to address the pension crisis, but stated that “proposals to arbitrarily limit the accrual of benefits betray the pension promise and violate the contract rights of Kentucky Retirement Systems members.” He added that his group’s members “will be conveying our opposition in our outreach to legislators throughout the review process.”
Sannie Overly, the chair of the Kentucky Democratic Party, issued a statement that “Switching new teachers and new nonhazardous state employees to a 401(k)-style plan will not only weaken local economies throughout the state but will continue to decrease our ability to attract and retain a skilled state workforce.”
“This is purely a move touted by ultraconservative groups across the nation to privatize state services, remove a skilled state workforce and drive down wages for our future educators,” stated Overly. “The war on the working class and public education must stop. This plan will do nothing to pay down our current pension obligations and ensures less retirement security for future generations to come.”
Sarah Davasher-Wisdom, the chief operating officer of Greater Louisville Inc., issued a statement that the local chamber of commerce was encouraged to hear some of the specifics coming from Bevin, Stivers and Hoover, agreeing that “by adopting a defined contribution plan for new hires and a level dollar amortization approach for debt payments, Kentucky has an opportunity to make a serious commitment towards paying off the pension debt and improving the Commonwealth’s credit rating.”
“We look forward to learning more about the details of the public pension reform bill and ensuring changes to the system meet legal and moral obligations owed to current and retired public servants, while increasing transparency and financial solvency,” stated Davasher-Wisdom.
Additional details on Bevin’s “Keeping the Promise” plan can be read below:
[scribd id=361945762 key=key-38eF8EVO2H4tCEPIZ3ns mode=scroll]
This story will be updated.