FRANKFORT, Ky. (WTVQ/Courier Journal) — The Kentucky General Assembly passed a version of House Bill 358– a pension relief bill– late Thursday night, but not the version the governor says he supports.
Governor Bevin told lawmakers in a letter on March 22nd that he would sign the Senate version of the bill, which would have frozen pension benefits for current employees of public universities and quasi-governmental agencies affected by H.B 358.
Those quasi-governmental agencies include health departments and crisis shelters, among others.
Under the Senate version, current employees would move to a 401k style plan, but the House version does not have that provision.
It would allow current university and agency employees to keep their pension benefits, with employees who retire after 2020 put into a 401k style plan.
According to the governor, many affected institutions would be forced to close their doors without this pension relief.
The institutions would have one year to pay what they owe back into the pension system, but the plan is still expected to cost the state’s pension system $799 million, according to the Courier Journal.
The Courier also reports the bill contains a controversial mechanism to ensure timely payments from universities and agencies.
If payments are missed by more than 30 days, current retirees drawing pensions will have those payments suspended, until their former employer becomes current with what they owe.
They would also be shifted from their current pension into a 401k style plan.
The Kentucky Center for Economic Policy reports that payments for affected institutions were set so low, their unfunded liabilities are actually expected to increase by nearly $200 million, over 30 years.
A statement from Kentucky Retirees Association says, in part, “House Bill 358 establishes a disastrous funding policy for the nation’s most fragile pension plan… we have no confidence that legislators will be able to fully fund pensions in the 2020 session.”
It’s not clear if Governor Bevin will sign this alternative version of the H.B. 358.
But if he vetoes the bill, the General Assembly will not have the ability to override the veto, since they are now officially out of session.