By Jacqueline Pitts, The Bottom Line
The House and Senate passed an amended version of Senate Bill 151 Thursday night that brings changes to the Kentucky Teachers’ Retirement System for future hires. The pension reform bill now goes to the governor’s desk for signature.
As often happens at the end of a legislative session, Senate Bill 151 was stripped of its original language and replaced with the new version of a pension reform plan.
Senate Bill 151, sponsored by Sen. Joe Bowen, was passed by both legislative chambers with the committee substitute that changes the system for future hires and removes provisions from the original Senate Bill 1 pension reform bill impacting those currently in the system and those currently retired including the cost of living adjustment reduction and years of service before retirement.
While presenting the bill in committee, Rep. John “Bam” Carney said this revised pension reform will help stabilize the systems and bring relief to the state’s cities and counties as they face increased pension costs. Carney also stated the bill will improve Kentucky’s credit rating and lessen the burden on the state in the future.
The amended version of Senate Bill 151 would move future hires into the Kentucky Teachers’ Retirement System (KTRS) into a hybrid cash-balance plan and would cap the amount of sick leave current teachers can use toward their retirement, as was included in the original Senate Bill 1. The new proposal does not change current and retired teachers’ cost of living adjustments (COLAs), and it removes the provision that said an employee must be either 60 years old or work 35 years to have their benefit calculated with that 3.0 factor.
The plan adopts a level dollar funding formula to ensure the correct amount of funds are put toward the systems up front rather than backloading payments as has been done previously.
Legislative pensions will also be transitioned to the same cash-balance system provided to future employees in this version of the bill.
The revised version of Senate Bill 151 was finally passed in the Senate around 10 p.m. and now heads to the governor’s desk for signature.
The legislature is expected to take a similar vote on a bill to give relief to local governments facing increasing pension costs which will cause a lot of harm to local budgets.
Check back on The Bottom Line to get the latest on these pension bills and budget issues.