By BERRY CRAIG
AFT Local 1360
State Sen. Reginald Thomas, D-Lexington, says HB1, the pension bill Gov. Matt Bevin signed into law on Wednesday, will trigger "a domino effect" that "will harmfully impact the state’s other retirement systems.”
Likewise, state Sen. Denise Harper Angel, D-Louisville, worries that Bevin's "bill will steer us closer to insolvency and greatly affect the Kentucky Retirement Systems.”
The governor said HB1 “is a remarkably responsible and appropriate next step in moving toward financial solvency.” Democrats and some Republican lawmakers beg to differ.
The legislation allows regional state universities and other quasi-governmental agencies to skip paying higher pension employer contributions for a year. It also incentivizes them to leave the state pension system, worsening the unfunded liability of the pension plan and breaking the inviolable contract of their employees who participate.
The GOP-majority House passed the bill 52-46 on Monday with nine Republicans joining the Democratic opposition. The measure cleared the Senate 27-11 on Wednesday with all the Democrats and a pair of Republicans rejecting the legislation.
The law, which took effect upon Bevin's signature, is retroactive to July 1, when steeper pension bills went out to the universities and other agencies.
Bevin, a Republican, is seeking reelection in November. His opponent is outgoing Attorney Gen. Andy Beshear, who was unanimously endorsed by the Kentucky State AFL-CIO when he won the May Democratic primary. (Thomas and Harper Angel have also earned unanimous state AFL-CIO endorsements.)
Bevin called a special session to pass his bill. In her "Senate Week in Review" email, Harper Angel said the governor had "no intentions to compromise. Instead of coming to Frankfort and working across the aisle to formulate solutions, we found ourselves in a political standoff."
Alternative bills and amendments proposed by House and Senate Democrats were "legitimate" and "immediately shot down," she added.
Harper Angel argued that HB1 "jeopardizes the retirement of public employees that have paid their dues and committed their careers to public service. Seventy-five percent of the unfunded liability rests with our retirees and this bill does nothing to address that issue. Nor does this legislation aid our quasi agencies or regional universities -- it foots the bill to the taxpayer at a cost of $870 million, increases pension debt, and further harms the pension system."
Harper Angel said she is concerned that the legislation "will steer us closer to insolvency and greatly affect the Kentucky Retirement Systems. This precedent opens the possibility for the General Assembly to act on pensions of other employees in the system. When dealing with an unfunded liability, you have to find funding. A topic that was absent in any of these discussions was new revenue. We have been shortchanging our public institutions for the past decade and instead of fixing them, we continue gutting them. These employees now fear for the security they were promised when they first committed themselves to a career in public service.
She said that besides rejecting "bipartisan efforts to work across the aisle when formulating this legislation," the Republican leadership also ignored "the voices of stakeholders...The entirety of the special session was an authoritarian power grab by the governor and the majority."
In his "July Legislative Update" email, Thomas said the GOP majority teamed with Bevin "to weaken the retirement system across the state," adding that "the governor himself admitted that the new law does not help lower Kentucky’s retirement debt—which has been called the worst in the nation."
The senator said "it is true that some of the struggling state agencies can keep their doors open, but at what cost to their future? By allowing these universities and agencies to 'buy' out of the system and providing incentives to the employers to move their employees to a less secure 401k-type benefit plan, it prevents the hard working men and women of the Commonwealth from earning secure future pension benefits."
Thomas said the biggest losers in the pension bill are "those state workers, who have dedicated more than 20 years to their jobs [and]...were hired with the promise that they would receive a defined benefit plan at the end of their career. Now they no longer have this security and their futures will depend on the fluctuating economy. In this plan, employers are not even required to contribute to their employees’ pensions."
He said the law "not only affects the workers, but their spouses and significant others, their children, and ultimately the state’s economy as a whole."
Thomas also said the GOP leadership brushed aside proposed Democratic bills and amendments.
"This action is not over, and the new law could be challenged by the courts," he warned. "Several legal issues surfaced during the special session including the wording of the proclamation the governor issued calling the lawmakers to Frankfort. I believe the governor overstepped his authority by preventing proposals other than his to be considered. Advocacy groups have also raised concerns in the legality of breaking state workers’ inviolable contract."