Legislatve Update: Session ends with passage of public-employee pension bill Rep. Graviss opposed

This column is a combination of one submitted last week and one submitted tonight.

By Joe Graviss
State representative for Woodford and parts of Fayette and Franklin counties

When the General Assembly returned to the Capitol on Thursday to complete this year’s legislative session, one unresolved issue towered over the rest.  Regrettably, the solution now set to become law is not the one we need, and the very way it was approved – late at night, before the bill could even be read – was a near-repeat of last year’s controversial and ultimately unconstitutional public-pension bill.

That 2018 legislation, as you may recall, was mainly about retirement benefits for teachers, while this year’s deals with an extreme jump in retirement payments for our regional public universities and quasi-government agencies like health departments and rape-crisis centers.  If nothing is done, these payments would set them back more than $100 million annually, causing steep cuts in services and likely forcing some to close.

The legislature gave these universities and agencies a 12-month reprieve last year, and in the House, at least, there was broad, bipartisan support to extend that freeze for another 12 months.  That would give the legislature’s new public-pension working group time to come up a permanent solution that could then be addressed as part of the next two-year budget.

The Senate, however, did not want to go that route, leaving us in search of another way, which is what passed in the session’s final hours on Thursday.  Governor Bevin now has 10 days to decide whether to veto or sign it into law.

Many may wonder why these retirement payments were scheduled to go up so much so fast.  A significant reason can be traced back to the summer of 2017, when Governor Bevin’s new appointees on the Kentucky Retirement Systems board immediately dropped annual investment growth assumptions to the most conservative rates in the nation.

These investments make up a substantial part of each retirement check, so that single vote meant that the long-term liabilities went up by billions of dollars overnight.  That, on top of the board’s additional changes in payroll growth and inflation rate, meant every agency contributing to these systems saw their annual payments go up significantly, too.  The state is able to absorb these costs, but many of our quasi-government agencies are not.

What the legislature passed on Thursday grants that second-year freeze everyone wants, but at a too-steep cost that puts more pressure on state finances, harms the most underfunded public retirement system in the country and makes it possible for hundreds if not thousands of public employees/retirees to lose benefits they’ve earned and are counting on.

It is a complicated matter, but this bill takes the affected universities and agencies out of the state retirement system – unless they decide by the end of December to opt back in.  If they choose to remain, they will have to find a way to pay a 70 percent increase in their annual retirement payments.

If they stay out, however, they will have to pay off their portion of the retirement system’s liabilities, but at a rate low enough that it would take decades, maybe a half-century or more, to get there.  Imagine buying a house with a 30-year mortgage and finding out that, at the end, you owe more than you did when you bought it.  That’s what this bill does.

For the universities and agencies leaving the state retirement system, new employees and those hired since the start of 2014 will be placed in a defined-contribution retirement plan like a 401(k).  Career employees hired before then would have the option of staying enrolled in the state retirement system, but if their school or agency defaults on just one monthly payment, they will immediately and permanently be placed in the 401(k)-like retirement plan with the others.  Those already retired from these agencies would also see their benefits stopped as well, until the matter is resolved and monthly payments resume.

It is important to emphasize that this bill only affects those paying into what is called the Kentucky Employee Retirement System.  This bill has no impact on teachers, local government employees and those who work in hazardous-duty jobs like police officers and firefighters.  Employees at the University of Kentucky and University of Louisville have different retirement plans and are unaffected, as well.

Other bills

Although this bill was the most controversial issue the House and Senate considered on Thursday, some other worthwhile bills did pass that day.  One will have businesses make reasonable accommodations for its pregnant employees, while the other will make our elementary and secondary schools tobacco-free unless they decide to opt out.  Most schools have already adopted this policy, but this will ensure it applies more uniformly.

Most bills that clear the House and Senate fall into five broad categories: education; health and well-being; criminal justice; economic development; and tweaks to the way government is run.

            The most prominent, and bipartisan, educational bill this year is focused on improving school safety.  Senate Bill 1 is the product of months of work last year by a task force formed as a response to the Marshall County High School shooting in early 2018.

            In short, this legislation streamlines school safety at both the state and district level and sets the stage to hire more school resource officers and guidance counselors within our schools  Legislative leaders have said they will increase funding for this work when the next two-year budget is adopted in 2020.

Another new educational law that drew significant support this year broadens the use of KEES, which high school students earn with good grades to help pay for their postsecondary education.  In this case, they’ll soon be able to use their lottery-funded scholarships for qualified workforce training.

Two other high-profile educational bills set to become law drew strong opposition from teachers and many like me who support our educators.  One will give the Jefferson County superintendent much more authority over who will be principal in that district, while the other changes the tribunal process used to handle appeals of a teacher who has been fired.  There is worry this new system will be unfair to teachers who feel they have been wrongly dismissed.

Quite a few bills to pass the legislature this year deal with criminal-justice matters, with two building on already-established laws.  The first of those expands the Class D felonies that can be expunged – which will help many more citizens who have long paid their debt to society – and it lowers the fee for this process from $500 to $250 and allows it to be paid in installments.

The second expands the use of DUI interlock devices, a type of breathalyzer that keeps a vehicle from starting if the driver is intoxicated.  Starting in July 2020, this law will apply to every first-time DUI offender, and he or she will have to use it for four months.

While these two laws modify existing statutes, another effectively does away with one that has been on the books since 1996.  In this case, Kentuckians 21 and older will no longer need a permit or the training it requires to carry a concealed weapon.  This will not apply to those who are otherwise not allowed to have a firearm, and other restrictions about where concealed weapons can be taken remain unchanged.  This law takes effect later this summer.

In other criminal-justice actions, the General Assembly cracked down on telemarketers who try to trick unsuspecting callers by using local numbers, and we also toughened the penalties for those guilty of strangulation.  Those who threaten places like churches and other public venues will face more serious punishment, as well.

There are some new laws that I opposed.  One, for example, will almost certainly undermine our growing solar industry by making it tougher for new residential customers to get full credit for the excess electricity they return to the grid.  A viable compromise originally passed the House, but that was unfortunately removed in the session’s final hours.

Another new law takes away much of the Secretary of State’s election responsibilities by removing that office’s vote on the state Board of Elections, meaning this board is now governed entirely by gubernatorial appointees.  The Secretary of State is our chief elections officer, so this change removes some key constitutional checks and balances. 

Several new laws will help veterans and those still serving our country.  It will soon be easier for those in the service to maintain in-state college tuition costs and stop select utilities without penalty if they are based out-of-state.  They and their spouses will also have an easier time getting interviewed when applying for state-government jobs.

Overall, this was a consequential legislative session, and I want thank everyone who let me know their thoughts and concerns.  It made a difference.  Looking ahead, I encourage you to keep reaching out if there is an issue you think needs to be addressed. 

If you would like to know more about legislation or the legislative process, please visit the General Assembly’s website at www.legislature.ky.gov. 

            Thanks for all you do, and holler anytime.