FRANKFORT, Ky. — A bill that would create a framework for local control over local public pensions in Kentucky has passed the state House.
House Bill 484, sponsored by Rep. Russell Webber, R-Shepherdsville, and Rep. Michael Meredith, R-Oakland, would create a new board of trustees for the County Employees Retirement System, or CERS, which serves cities, counties, and classified school employees statewide. The new board would have fiduciary responsibility, while day-to-day administrative services of CERS and KRS would be handled by a shared administrative authority.
Webber said decisions regarding CERS are now made by the Kentucky Retirement Systems (KRS) board of trustees although CERS is not directly funded by state government.
“(CERS) representation on the KRS board is only 35%, yet they are 76% of the assets and 64% of the members. They have no one on the KRS investment committee, which decides where and how CERS funds should be invested,” said Webber. “They will tell you that that has resulted in decisions being made that has cost their system much-needed investment income because the state’s Kentucky Employees Retirement System (KERS) is so poorly funded.”
There would be no change in retirement benefits under HB 484, which would also not change the state’s “inviolable contract” – statutory language that secures benefits of members who began participating in Kentucky’s public pension systems prior to 2014. Shared liability among CERS employers, in the instance that an employer leaves CERS, would also not change under the bill.
Legislative intent for creation of separate statutory “structures” for KRS and CERS benefits during the 2021 Regular Session is also found in HB 484. The proposed CERS board of trustees would assume its new responsibilities in April of next year under the proposal, with continued General Assembly oversight of all public pension systems going forward.
Rep. Jerry T. Miller, R-Louisville, spoke in support of HB 484 which he said addresses issues he first encountered as a member of the Louisville Metro Council several years ago.
“I saw the double-digit rate of increase that we had been getting charged with, and I did a quick calculation of how (fewer) policemen we have than when Louisville Metro merged,” said Miller. “It was in the 100s. That began my pension journey, and led me to the conclusion that local government was not being properly represented on the KRS board (of trustees).”
“I think this is a very balanced approach,” he told the House.
HB 484 passed the House on a vote of 90-4. It now advances to the Senate.
TRS pension bill gets House approval
FRANKFORT, Ky. — A new benefit structure for future regional university hires that is designed to improve stability of the state’s Teachers’ Retirement System was approved Wednesday by the Kentucky House.
House Bill 613 sponsor Rep. James Tipton, R-Taylorsville, said the bill addresses regional comprehensive university presidents’ concerns about the funding level of TRS, which Tipton said is now funded at around 50 percent or “nowhere near the funding level that is considered to be appropriate,” he added.
HB 613 would help TRS achieve a $38 million savings over 20 years and a savings of $104 million over 30 years, said Tipton. No action, he said, is expected to cause TRS’ required level of contributions to increase to $2.4 billion per year in 20 years.
“So we do have to be taking proactive measures,” said Tipton.
HB 613 would place all certified or degreed regional university members hired as of Jan. 1, 2021 and entering the TRS system into a two-pronged plan with both a “foundational benefit” and “supplemental benefit” component. New hires would be eligible for retirement under the foundational benefit at age 55 with a minimum of 10 years’ service or age 65 with a minimum of five years of service, with a final salary based on an average of their top five salary years. Benefits under the separate supplemental plan would be based on accumulated contributions and interest in that account.
Funding safeguards in the bill would permit the TRS board of trustees to change any or all of the bill’s provisions — including the benefit factor for new university members, etc. — to maintain funding at or above 90 percent.
Unchanged would be the current statutory 1.5 percent annual retiree cost-of-living increase, or COLA, which would be provided to retirees under the bill. Retiree health benefits would also be offered.
Those voting against the bill included Rep. Patti Minter, D-Bowling Green. The Western Kentucky University professor said the proposal in HB 613 would be a “benefit cut” going forward.
“It will likely force people into the 401k style plan,” said Minter. “So I think there are some pretty grave concerns.”
Supporting the bill was Rep. Joe Graviss, D-Versailles, who said HB 613 could potentially save jobs.
“I think that having a hybrid pension and a job is better than not having either one,” said Graviss.
Kentucky’s regional comprehensive universities include Eastern Kentucky University, Western Kentucky University, Morehead State University, Murray State University, Kentucky State University, and the Kentucky Community and Technical College System. HB 613 would not apply to the University of Kentucky or University of Louisville which have separate retirement systems.
HB 613 passed on a 65-31 vote and now advances to the Senate.