Multiple options for more than 100 quasi-governmental agencies and regional university in Kentucky to get a handle on their rising pension costs passed the General Assembly in special session.
The options found in House Bill 1 would allow the state's about 118 quasi-governmental agencies -- including local health departments, regional state-supported universities and community colleges, domestic violence shelters and others -- to keep their employees in the Kentucky Employees Retirement Systems (KERS) nonhazardous plan at increased costs, or move all or a portion of their employees to an alternative retirement program. Agencies that leave KERS would have to pay their unfunded liabilities, which are earned but yet unfunded benefits, in either a lump sum or in installments.
The bill was approved on a 27-11 vote in the Senate Wednesday after passing the House by a vote of 52-46 on Monday. It was signed into law by Gov. Matt Bevin Wednesday afternoon.
Local legislators were split in their votes, with State Reps. R. Travis Brenda, R-Cartersville, Robert Goforth, R-East Bernstadt, and Deanna Frazier, R-Richmond, all voting no. State Rep. Les Yates, R-Winchester, and State Sen. Jared Carpenter, R-Berea, voted yes.
"I felt OK voting yes. It's almost, you feel good and feel bad. You wish you weren't there, but something had to be done and pensions had to be protected," Yates told The Register. "There is not a perfect answer. I felt like it gave us some breathing room and the quasis breathing room."
Yates said his biggest issue was lawmakers allowing everything to get to this point. He questioned why more wasn't done previously when many knew there would be issues.
"I don't have the answer, something has to be done to make sure this doesn't happen again. That's my frustration," Yates said. "We did what we felt was the right thing and I'm okay with that. I'm not sure why some Republicans voted no."
Frazier said she voted no because she felt the legislators needed to provide more guarantees to current employees in the retirement system. She said the decision was influenced by feedback from her constituents.
"Nonetheless, I commend Eastern Kentucky University for their efforts to find common ground on this tough and complicated issue, including on the relief measure, HB 358, that I did support during the 2019 Regular Session," Frazier said. "I appreciate their efforts, and look forward to continuing working with EKU and the Madison County Health Department as they gather actuarial data in order to make their ultimate decision on this matter in April of 2020. My door is always open to discuss any issue."
Eastern Kentucky University President Michael Benson issued a statement to the university shortly after Bevin signed HB1 into law. He said there will be no immediate impact to employees participating in the Kentucky Employee Retirement System (KERS), and no decision about EKU's participation in that system would be made until April 1, 2020.
"Moving forward, we will work diligently to determine the best course of action for EKU, keeping in mind our core principles and our mission of providing a top-notch education for our students as well as a productive work environment for our employees," he said.
If the legislation was not passed and did not freeze the KERS employer contribution rate for another year, the rate was set to increase to 84% from 49%.
EKU's contribution would have soared from $13.2 million to $22.8. For the Madison County Health Department, the pension contribution increase would have been more than $1.3 million and about 12 percent of its annual budget.
Brenda said his no vote was due to HB not being affordable or sustainable for many agencies in the long term.
"The (health departments) are not going to be able to afford the options presented in HB1 without significant cuts in the services that impact many areas of our communities," he said of the three health departments in his district. "HB1 also gives the employers of these groups the option to take their employees out of the retirement system, preventing them from continuing to reach their full retirement that they were promised when hired. HB1 does not give the individual employees an option to stay in the system."
Brenda said he is worried that reducing the retirement promise without increasing wages to a competitive level will result in a decreased workforce in these necessary positions. He said he also received several phone calls from those in his district asking him to vote no.
Brenda said there have been promises to revisit this legislation in the 2020 session to make improvements.
"I am not optimistic that any improvements would make it through the legislative process," he said.
Goforth said, for him, it came down to not fulfilling promises to these employees with their retirement benefits.
"I hope we come back to session in 2020 and look at this again, to find a real solution for these employees, so that we can protect them and their retirement benefits," he told Kentucky Today.
Jonathan Greene is the editor of The Register; follow him on Twitter @jgreeneRR.