New Pension Reform Proposal Is As Unpopular As Last Pension Reform Proposal

The Kentucky Senate’s State and Local Government Committee is considering a bill to fix the Commonwealth’s underfunded pension system.

The sponsors of Senate Bill 1 consider it a compromise between what Gov. Matt Bevin proposed last year and what state and county employees have asked for, which is full funding for the first time since 2001.

If enacted, SB1 would enroll new government employees in a hybrid cash balance pension program in which benefits are accrued in individual retirement accounts. It would fund the pension accounts through a combination of employee contributions and funds from local and state taxpayers.

That sounds good, but unfortunately for the bill’s sponsors, there are two problems: SB1 might be illegal and no one likes it very much.

Sen. Tom Buford explained his position on SB1 succinctly.

“I AM A NO VOTE,” Buford said.

He referred to a letter written by Attorney General Andy Beshear, in which Beshear laid out his legal objections.

Beshear wrote that SB1 unlawfully reduces cost of living adjustments—which teachers pay for while they are working—caps the use of sick time, “extends years of service to qualify for some benefits and forces teachers to contribute significantly more of their salaries to their retirement.”

Beshear said, if passed, SBI would violate the inviolable contract between the state and teachers. It would also change how retirement is calculated, reduce or cap sick leave benefits and impose new deductions for state police officers, state employees, and county employees, all of which Beshear called unlawful.

“This bill has so many unconstitutional parts, it is so flawed,” said Sen. Buford, who also opposed Gov. Bevin’s original proposal. “We must find the funding and honor the promise as per the law.”

He is especially opposed to the way it treats Kentucky’s teachers, who are not eligible to receive Social Security and are totally reliant on their state pensions for retirement.

Buford, a Republican, said the bill does not fix the Commonwealth’s unfunded pension liabilty and, “in fact may cause more damage than repair.”

The senator said he had  not seen the scoring on the bill and could not say how the costs to the state may occur and in what amounts for the change.

“To make the fix will require tax reform,” Buford said. “Even if we pass this, we still need tax reform.”

Carrie L. Mays, a teacher at Mercer County Intermediate School, also opposes SB1.

“The General Assembly seems to be ignoring the fact that the solution to the financial crisis that they caused is to find funding first,” Mays said.

A teacher with 26 years of service, Mays said it was unfair to change retirement requirements and benefits which teachers have been paying for all through their careers.

Mays, who also serves as president of the Mercer County Education Association, referred to the wave of 40 educators currently running for elected office in Kentucky, including here in Mercer County, where Carolyn Dupont, who is running to replace Buford in the state senate, and Cathy Carter, who is running to unseat Rep. Kim King.

“We are all very frustrated with our governor and most of the legislators,” Mays said. “When you have 40 educators running for office, that tells you something.”

To learn more, check out this week’s issue of the Harrodsburg Herald.

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