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Despite productive talks, still no deal

Published 9:59 pm Saturday, March 9, 2013

House and Senate leaders met with Gov. Steve Beshear Friday, looking to find common ground on a plan to reform Kentuckys ailing public pension system and avoid a special session this year.

Those involved described the meeting as productive, and talks are expected to continue during the upcoming 10-day veto recess.

The two legislative chambers have passed fundamentally different retirement plans for future state and municipal workers, and the House has proposed a dedicated funding stream to pay full pension contributions, something the state has not done in years.

Details on Fridays discussion at the Governors Mansion were scant, but Gov. Steve Beshear sounded optimistic that lawmakers can break the impasse before the 2013 session ends March 26.

I think everyone is participating in good faith and everybody is sincere in wanting to try to work through these issues and come to some acceptable conclusion, Beshear said Friday afternoon.

So, I start off being optimistic. We may be up and down in that department over the next several days, but Im encouraged by the attitude that everybody has.

Other issues came up during the meeting, participants said, but pension reform has been pegged the top legislative priority of the 2013 session.

The Kentucky Retirement Systems, which administers defined benefit retirement plans for more than 87,000 retirees and 139,000 active state and local government employees, faces some $18 billion in unfunded liabilities.

The House and Senate disagree on whether public employees should stay with a defined benefit pension program.

Though both chambers agree the state should make full pension contributions expected to be about $100 million more in General Fund dollars starting July 1, 2014 the gulf between the two sides remains wide.

House Speaker Greg Stumbo, D-Prestonsburg, called the meeting a good start, adding the journey of a thousand miles starts with the first step.

Obviously we dont have any agreement not even close but we agreed to take the first step toward trying to resolve that issue in this session and avoid a special session, Stumbo said, and everyone around that table is committed, I believe, to that principle.

Senate President Robert Stivers, R-Manchester, said Fridays meeting was broad based, covering a number of pending issues as the 2013 session winds down. Lawmakers also set parameters for future talks, which are expected to continue during the veto period, he said.

All of our members are ready, willing and able to work through this period of time, Stivers said. Were here to get the job done.

He doubts a conference committee on Senate Bill 2 will be appointed Monday and Tuesday, which are reserved for the House and Senate to concur on amended bills.

Still, Stivers said he is very optimistic a resolution can be reached based on Fridays very fruitful and productive meeting between caucus leaders in both chambers.

Senate Bill 2, sponsored by Senate Majority Leader Damon Thayer, R-Georgetown, was the product of a bipartisan legislative task force. The legislation would create a hybrid cash balance plan for state and municipal workers hired after July 1, 2013.

The plan calls for the same contribution structure, but the value of workers accrued benefits would face more risk on the stock market, with a 4 percent investment return guaranteed by the state. The bill would also redact automatic cost-of-living raises for retirees.

The House version of SB 2, however, would keep the defined benefit plan and mandate pre-funded cost-of-living raises for retirees. It would also establish an oversight board to review and recommend changes to retirement benefits for future employees as long as full pension contributions have been made the previous five fiscal years.

The House also proposed House Bill 416, a funding mechanism based on pari-mutuel taxes on Instant Racing receipts and expanded Kentucky Lottery games. The bill has been in legislative limbo after it passed 52-47, failing to reach the 60-vote supermajority necessary in 30-day sessions.

Paying for pension reform could be a sticking point in upcoming talks. Beshear said he, like House Democratic leadership, wants to dedicate a funding source to pay future pension contributions.

But avoiding a special session remains paramount.

Theres always the option of a special session because Im the one that can call one, but Im just as committed as they are to trying to find a solution that we can pass during this session, Beshear said.

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