Three interesting things from the draft version of the pension reform bill

10/30/2017 03:22 PM

The 505 page draft of the pension reform bill which will likely debated in a yet-to-be-called special session of the General Assembly, has several new points that expand on the recently released reform outline.

The overall bill could change before the special session as this is just a “draft” of the final legislation, and this list is not comprehensive, but rather a first pass at the ideas we’re just discovering inside the proposal.

  • If agencies under any of the pension umbrellas miss payments, or become delinquent as contribution rates increase retiree allowance payments will end. (Page 367 of the bill)

Former Kentucky Retirement Systems trustee Chris Tobe calls the language in the bill a “bankruptcy bombshell,” and questions whether the phrasing could immediately take away pensions for Louisville Social workers at Seven Counties Services, who filed for bankruptcy in 2013 to escape the crushing weight of their pension obligation.

  • The legislation resets the amortization period to 30 years. The longer the period, the more interest the state pays.

Jim Carroll, co-founder of Kentucky Government Retirees, tweeted that “resetting longer amortization — my apologies — “kicks the can down the road.” Who wrote this wretched bill? #SaveKERS.”

“Actuaries say a closed DB plan should shorten its debt amortization,” Carroll continued in a separate tweet. “This bill does exactly the opposite. Huh. #SaveKERS.”

  • The draft bill also calls for three percent of state employees’ salaries towards health benefits, as outlined by the Kentucky Center for Economic Policy. However, employee health plans are better funded than similar plans across the country, according to KCEP.

“The new contribution will cut wages by approximately $158 million annually for state workers (including teachers) and another $85 million for local workers — and many of these employees have not received raises for much of the last decade,” KCEP wrote in a blog post. “For a teacher who spends 27 years in the classroom at present-day salaries, the 3 percent contribution would mean the loss of about $40,000 in lifetime income.”

Nick Storm

Nick Storm is the Anchor and Managing Editor of Pure Politics available exclusively on Spectrum News. Pure Politics is the only nightly program dedicated to Kentucky politics. Nick covers all of the political heavyweights and his investigative work brings to light issues that might otherwise go unnoticed, like his coverage of the backlog of DNA rape kits waiting to be tested in Kentucky. Nick is also working on a feature length bio documentary Outlaw Poet: A documentary on Ron Whitehead. Pure Politics airs weeknight at 7 and 11:30 on Spectrum News. Follow Nick on Twitter @NStorm_Politics. Nick can be reached at 502-792-1107 or nicholas.storm@charter.com.

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