The 2019 Extraordinary Session delivered another blow to the already struggling pension system and legislative independence.
The governor called this special session and, from its inception, it was obvious there were no intentions to compromise. Instead of coming to Frankfort and working across the aisle to formulate solutions, we found ourselves in a political standoff.
Democrats in the Senate and House stood firm in opposition to House Bill 1, a measure proposed by the governor and supported by the Republican majority to deal with the rising pension costs of quasi-governmental agencies and regional universities. These agencies include local health departments, regional state-supported universities and community colleges, domestic violence shelters, rape crisis centers and others.
This is an issue we had to confront immediately following the governor’s veto of the pension bill passed by the majority during the 2019 Legislative Session. As of July 1, there were significant increases in the employee contribution rate to the pension system for employees of quasi-governmental agencies and regional universities.
HB 1 will allow the 118 quasi-governmental agencies to keep their employees in the Kentucky Employees Retirement Systems (KERS) nonhazardous plan at increased costs or move all or a portion of their employees to a defined contribution retirement program, which directly conflicts with the inviolable contract. Agencies that leave KERS would have to pay their unfunded liabilities, which are earned but yet-unfunded benefits, in either a lump sum or in installments. The bill was approved on a 27-11 vote in the Senate after passing the House by a vote of 52-46.
I voted no. The vetoed pension bill was a bad piece of legislation and so was HB 1. I believe this bill jeopardizes the retirement of public employees who 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.
I worry this pension bill 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, and as I said in a floor speech, we could get new revenue without raising taxes, and I would oppose any taxes on the public. 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.
There were no bipartisan efforts to work across the aisle when formulating this legislation. The voices of stakeholders were ignored and any attempt to offer alternatives were disregarded. Our caucus offered numerous, legitimate amendments that were immediately shot down on the Senate floor. The entirety of the special session was an authoritarian power grab by the governor and the majority.
A promise made is a promise kept, and HB 1 breaks that promise. This bill is an attack on the inviolable contract promise to these employees, which means if they are successful here, next is Teachers' Retirement System and then the State Retirement System.
I will continue my work on behalf of public employees and fighting so that those promises are kept. I anticipate a long legal battle to come and will keep you informed on any updates in regards to HB 1.
Interim meetings will continue monthly throughout the remainder of 2019. Unless we are called into another special session, the legislature will reconvene for regular session on Tuesday, Jan. 7.
Sen. Julian Carroll, D-Frankfort, can be reached via the Legislative Message Line at 800-372-7181 or by email atJulian.firstname.lastname@example.org.