FRANKFORT — Republican leaders in the Kentucky state Senate say they hope to vote on a sweeping overhaul of public teacher pensions by the end of next week.
Republican Sen. Joe Bowen, the bill’s chief sponsor, said the plan is for a Senate committee to vote on the measure Wednesday. Sen. Damon Thayer, who controls which bills are called on the Senate floor, said he hopes the full Senate will vote on the bill by the end of next week.
Kentucky has one of the worst-funded pension systems in the country. The state is at least $41 billion short of the money required to pay benefits over the next 30 years, according to official estimates.
Kentucky’s Republican leaders, including the governor and leaders in both legislative chambers, have pledged to fully fund the pension system in the state budget. That’s at least $3.3 billion over the next two years, or 15 percent of all state spending. That doesn’t include the hefty amounts local governments would also have to pay into the system.
The massive sum has prompted Republican Gov. Matt Bevin to propose budget cuts of at least 6 percent across most of state government. He has also eliminated funding for 70 programs, including the state’s poison control center and a network of weather monitoring stations used to issue warnings for severe storms.
State officials say Senate bill 1 would completely eliminate that $42 billion debt over the next 30 years while saving the state $4.8 billion. Most of those savings would come from benefit cuts to current and retired teachers. The plan would cut in half the annual cost-of-living raises for retired teachers for the next 12 years. It would stop paying teachers for any unused sick days accumulated after July 1. And it would give teachers who work longer, at least 35 years instead of 27 years, more generous benefits.
Bowen said the biggest pushback on the bill is slashing the annual cost-of-living raises for retired teachers. He said the bill will likely change once it is vetted by the State and Local Government Committee, but declined to say how “because it’s still fluid.”
“That’s a work in progress,” he said.
Thayer said the cost-of-living cuts will likely stay in the bill because they are “an important part of the savings that we’ll achieve over the long term.”
The bill is significantly different from a proposal endorsed by Gov. Bevin last year. That bill would have capped all retirement benefits after 27-years of service and moved everyone into a 401(k)-style plan. Lawmakers abandoned that plan after an analysis showed it would cost the state too much money. Bevin has not said publicly if he supports the new pension bill. Representatives from his office have not responded to requests for comment.
Kentucky Education Association President Stephanie Winkler said she was encouraged by the bill’s changes, but added she still could not support the bill.
“Structural changes and cost-shifting the legislature’s financial obligations to public employees and ultimately, to local taxpayers is not the answer to the funding problem that plagues the entire state budget,” she said.