Kentucky’s Pension Crisis: How we got here

Kentucky’s Pension Crisis: How we got here
The Kentucky State Capitol


LOUISVILLE, KY (WAVE) - Kentucky’s pension shortfall has been decades in the making, but it’s taken center stage over the past two years.

The issue was a major topic during the governor’s race in 2015, and when Republicans won supermajorities in both legislative chambers in 2016, a major overhaul of Kentucky’s retirement systems looked certain.

Once the GOP took over, other issues took priority during in the 2017 regular session, and Gov. Matt Bevin promised the pension overhaul would have its own special session later in the year.

In October of last year, Bevin unveiled his “Keeping the Promise” plan to address the pension’s funding shortfall.

Bevin’s plan would have fully funded the state’s contributions going forward, but also would have made major changes that proved hugely unpopular. Those included a cap to a 401k-style plan for new teachers, a cap on counting sick days toward retirement, and a requirement that current teachers and other public employees pay 3 percent of their salaries toward retiree health care.

After fierce opposition from teachers and others, Bevin never called the promised special session. Republican lawmakers eventually scrapped most of his proposals, and filed a watered-down bill of their own during the regular 2018 session. SB 1 eliminated the 3-percent healthcare payment and allowed all current teachers to stay in the existing pension plan, but it too, failed, largely because it limited the rate at which future benefits would grow.

In the final days of the session, however, Republican lawmakers finally managed to pass some of the pension reforms by swapping out their proposals with a sewer bill that was already close to passage, and voting that bill through hours later.

Last week, the Kentucky Supreme Court ruled that process was improper, essentially voiding all of the changes and sending the entire issue back to the starting point.

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