Pension Reform Still Not A Done Deal

Robert Moore

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While many state and local government employees cheered when a judge recently ruled the controversial state pension reform bill was unconstitutional, the legal maneuvering has left local governments and schools waiting anxiously.

It seemed like good news when Franklin Circuit Judge Phillip Shepherd struck down the widely unpopular pension reform law and permanently enjoined the governor from implementing it. But Gov. Matt Bevin’s legal team filed a motion that also questioned the constitutionality of another law that would have helped local governments and schools deal with skyrocketing pension costs.

The law in question allowed local governments and schools to phase in increases in their contributions to the County Employees Retirement System over 10 years instead of all at once.

Local governments had just finished setting their budgets for the new fiscal year, which started July 1. If the judge had ruled the second law was also unconstitutional, governments would have been forced to scramble to cover the increased pension expenses.

Bevin’s legal team withdrew the motion on Friday, according to published reports, but it threw a scare into everyone, even those who supported the pension reform.

Opponents have said all along that the pension reform bill—which forces teachers to enter a hybrid cash-balance plan similar to a 401(k) rather than a traditional pension, requires them to work longer before retirement and caps the amount of accrued sick leave teachers may convert toward retirement— was unconstitutional.

They seemed vindicated on June 20, when Judge Shepherd ruled that Senate Bill 151 violated the state constitution because legislators failed to give it three readings in each chamber, as required by state law.

SB 151 was originally a bill dealing with sewer systems until lawmakers added the bulk of a previous pension reform bill that had died for lack of votes. The judge found that the five previous readings the bill had received before being rewritten were no longer valid. He also found that because SB151 appropriates money, it needed the support of a majority of all members in the House to pass. The bill was approved with only 49 votes, two short of a constitutional majority.

Judge Shepherd did not decide if the bill violated the state’s “inviolable contract” with teachers and other public workers.

“They never even got to that point,” said Dennis Davis, superintendent of the Mercer County School District.

The district has concentrated on recruiting new teachers earlier in the year, as well as finding enough bus drivers to cover all of the routes. Amber Minor, the finance officer for the Mercer County School District, said the legal questions surrounding would not have an impact on hiring.

“Right now, we’re processing those employees as usual,” Minor said.

If Judge Shepherd’s ruling is not overturned upon appeal, the law will not go into effect until Jan. 1, 2019.

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

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