FRANKFORT, Ky. (KT) - Progress is being made on support for a bill to shore up the public pension plan that affects the regional universities and quasi-governmental agencies and eliminates the unfunded liability.
Senate President Robert Stivers, R-Manchester told reporters they will have discussions on Wednesday, following a meeting of the Legislative Research Commission.
“I understand the Governor’s office has been talking to multiple House members,” he said. “They feel they are getting closer to gathering up the votes.”
Gov. Matt Bevin has said he wants to hold a special session on the issue before July 1, so changes can be made before the start of the state’s new fiscal year on that date, and Stivers says the biggest roadblock on calling one is scheduling.
“We are citizen legislators, so individuals have their jobs,” he said. “I know some members have had business outside the state, there are graduations, just those normal things that you have had to put off during the legislative session.”
Stivers says he thinks they have enough votes in the Senate to pass the bill.
“We haven’t formally sat down and polled, but we’ve not heard any major objections. But I don’t want to tell you definitively we do, or we don’t.”
He says for the governor to summon lawmakers to Frankfort for a special session “it really puts the impetus upon the executive branch to have the legislation drafted, prepare the call in accordance with the legislation drafted and make sure both chambers are ready to pass that legislation.”
Stivers said he feels it’s important, due to the circumstances the state is in regarding the public pension system, to have the special session before July 1, due to increase in pension costs to the agencies, which are projected to be 87 percent of payroll.
“For every $10,000 of payroll, that means there will be an additional payment of $8,700 to deal with traditional costs and legacy costs,” he said. “So you can see why it becomes extraordinarily cumbersome, if not totally detrimental, to many agencies.”
Stivers says freezing rates for another year, as some have proposed, would just exacerbate the situation.
“That 87 percent will grow, because your legacy costs aren’t being reduced, they’re being increased. So that 87 percent would go up to around 95 percent. Then your bonding agencies start looking at that and saying, ‘Are you making significant strides toward dealing with the pension problem?’ If you aren’t, they’re going to say you’re more at risk.”
Stivers said he feels strongly there needs to be a consensus before the special session is called. “It would be a waste of time and money if there is not. So, if one is called, there should be the votes.”
The proposed legislation allows the universities and quasi-governmental agencies to opt-out of the pension system on July 1, 2020, paying either an actuarially determined lump sum or over a 30-year period.
House members have said there are not enough votes to pass, and Rep. Jeff Hoover, R-Jamestown, recently sent a letter to his colleagues urging them to vote against the governor’s proposal.
Kentucky has one of the worst-funded public pension systems in the nation, with at least $43 billion in unfunded liability.