FRANKFORT, Ky. — A House committee Thursday advanced bills that would close the Legislators’ Retirement Plan, change how pension liability costs paid by public employers are calculated, and amend statutory language on any future state employee annual cost-of-living raises.
One of the bills getting the go-ahead was House Bill 270, a proposal to close the Legislators’ Retirement Plan (LRP) –which serves current and former elected members of the Kentucky General Assembly—to any new members as of July 1, 2020. Legislators elected after that date would have to participate in the Kentucky Employees Retirement System (KERS) non-hazardous plan per the bill, HB 270 sponsor Rep. James Tipton, R-Taylorsville told the House State Government Committee.
An exception would be made for legislators who are also public school teachers. Those lawmakers could remain in the state Teachers’ Retirement System, per the bill.
Other changes under HB 270 would require LRP members who entered that plan as of Jan. 1, 2014 be moved to the KERS non-hazardous plan. Legislators who entered the plan in 1982, but prior to Jan. 1, 2014, would have their benefits calculated at a lower rate after July 1 of this year per the bill, among other provisions.
Tipton said HB 270 would also impact legislators who retire from the General Assembly then begin work in another branch of state government. Retirement credit earned in their new position as of July 1, 2020 would not be able to be used to calculate benefits under the LRP, he said.
Also, changes effective as of July 1 per the bill would not be part of an “inviolable contract,” statutory language that prevents any reduction or weakening of earned pension benefits.
Rep. Kelly Flood, D-Lexington, spoke in favor of HB 270 which she said reflects “the proper tension point” facing Kentucky’s public pension systems.
“We have to move in a way right now that says, ‘We’re joining everybody else…because it’s time,’ said Flood. “We have a responsibility to make sure everybody is viable.”
Also approved was House Bill 143, sponsored by Tipton, which would eliminate a longstanding, yet recently underutilized, provision in state law that provides for an annual cost-of-living adjustment (COLA) of 5 percent to state employees. The COLA would instead be tied to the requisite consumer price index, resulting in a 2.25 percent annual increment in the next budget cycle according to the bill’s fiscal note—although the bill would not budget for any future annual state employee COLA.
Wording in current law has allowed the 5 percent state employee COLAs to be passed over for many years. Tipton said that full 5 percent COLAs under state law were last funded in 2001.
Rep. Jason Nemes, R-Louisville, said it has been “frustrating” to not be able to pay COLAs to employees in lean budget years. He is hopeful, he said, that can be changed.
“Let’s not only put it in law, but try like heck to make it a reality for our public employees that work so hard for our people,” said Nemes.
The last retirement measure approved by the committee was HB 171, sponsored by Rep. Jim DuPlessis, R-Elizabethtown, which would base KERS non-hazardous employers’ actuarial liability to the retirement system on a set dollar amount instead of a percentage of payroll beginning next fiscal year.
The change, said DuPlessis, would ensure that small agencies especially are only required to pay what they owe to the system and “no more, no less.”
The bill received the support of House State Government Committee Chair Jerry T. Miller, R-Louisville, who said HB 171 would provide more stability in the long term.
“It helps particularly rape crisis centers, and others … smaller entities that will benefit almost immediately from your bill,” Miller said, adding that the bill will ultimately go before the House budget committee for additional review.
The three bills now go to the full House for further consideration.