Pension reform to be SB 2 and will be filed in early Feb.; Funding could be sticking point
01/11/2013 05:00 PM
Senate Republicans are underscoring the importance of shoring up the public pension system by designating the reform bill as Senate Bill 2. And the bill’s sponsor, Sen. Damon Thayer, has pledged to move the bill quickly when legislators return to Frankfort Feb. 5.
Thayer, the Senate Republican floor leader, co-chaired the task force that looked into ways to stabilize the finances of the Kentucky Retirement System, which oversees retirement for city, county and state workers and state police. The group suggested changing the benefits for future hire to individual investment accounts that guarantee 4 percent interest, as well as making the full payment the state owes into the system each year, starting in fiscal year 2015. That would mean finding more than $300 million more.
Thayer said there has already been some cross talk between the chambers on whether a pension reform bill must say how to fully fund the required payments.
“We don’t need to deal with the funding mechanism, but what we do need to do is to express an intent to fully fund the actuarially recommended contribution in the next budget cycle,” Thayer said.
But the recommendations from the task force, alone, might not be enough to pass the House, said House Speaker Greg Stumbo, D-Prestonsburg.
Stumbo said true reform would mean finding a source for the extra money. Stumbo said leaving that out allows legislators to say they dealt with pension reform, “without doing true pension reform.”
“If you really want to fix the problem then we have to find the revenue to shore up the system,” Stumbo said.
Thayer didn’t think Stumbo’s objections would slow down the “strong momentum for pension reform.”
“The speaker has mentioned on numerous times that he feels it is the time to do pensions, and I feel like we’ve got a good chance going forward to get it passed this session,” Thayer said.
In the shorter legislative sessions during odd-years, each chamber would need a three-fifths super majority to pass any bill dealing with revenue. That could make it more likely tax reform – - which could be used to fund the pension system shortfall — would be done during a special session or in 2014.
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