Judge finds Kentucky’s pension overhaul unconstitutional

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FRANKFORT, Ky. (KT) — Franklin County Circuit Judge Phillip Shepherd has declared a new Kentucky law overhauling the state’s government pension system unconstitutional.


In a ruling Wednesday, Shepherd took issue with the process lawmakers used to enact the law.


Shepherd’s ruling is certain to be appealed. Ultimately, the law’s fate will be determined by the Kentucky Supreme Court.


Overhauling the pension system for government employees in this year’s legislative session sparked protests from teachers, who held a series of protests at the Capitol.

Democratic Attorney General Andy Beshear said Shepherd’s decision is a “win for open, honest government.” Beshear filed the lawsuit that led to Wednesday’s decision. 
“They were betrayed by their government that acted behind closed door and in the dark of night.  But we fought back, and Kentucky’s public servants have won.”


Gov. Matt Bevin and the Republican-controlled Legislature took steps intended to shore up the financially troubled retirement systems, fearing that, without changes, they could go bankrupt and retirees could lose their benefits.


“I appreciate today’s ruling, which is a victory in every sense of the word for the people of Kentucky, especially our teachers, public employees and retirees,” said House Democratic Leader Rocky Adkins. “It confirms the arguments that House Democrats and I made as we soon saw the bill.  I said it was a bad bill then; it’s still a bad bill today; and Judge Shepherd reaffirmed that with his opinion.”


Senate Democrats said they had maintained it was bad legislation rushed through the process without proper vetting. 


“We applaud the court for its decision that the General Assembly violated the Constitution when it turned an 11-page sewer bill into a 291-page pension bill and passed it without three readings,” they said.  “We are hopeful that the legislature can come together and work in a bi-partisan manner to fulfill our promise of a pension and move our state forward.”

 

Stephanie Winkler, president of the Kentucky Education Association, said she was happy for "our public employees, especially those in our public schools which are vital to every community in the commonwealth.” said Stephanie Winkler, president of the Kentucky Education Association.  We joined together to make sure our government works for the people.  They have not been working for the people by the rules.  We need to quit with corrupt government and start governing the way the citizens expect, with integrity, honor, and for the people and our values.  If we start doing that again, there’s no stopping the progress that can be made in Kentucky.” 

 

Republican Party of Kentucky Communications Director Tres Watson issued a statement on the ruling.

 
"We're not surprised Judge Shepherd sided with Democratic Attorney General Andy Beshear in his politically motivated lawsuit against the General Assembly's efforts to save our state retirement system," Watson said. "We are confident this decision will be overturned upon appeal."


Communications Director Elizabeth Kuhn issued a statement on behalf of Gov. Bevin: “Today’s ruling from Judge Shepherd was expected in light of his inherent conflict in deciding the validity of SB 151, and an appeal from our legal team is imminent. Judge Shepherd refused to consider whether or not the bill violates the inviolable contract when issuing his ruling, and he invalidated the bill based, in part, on a procedural argument not even raised by AG Beshear.”



It was not a clean sweep for Beshear, who filed the lawsuit against Bevin, Senate President Robert Stivers and House Speaker Pro Tem David Osborne.

 

The judge held that the failure to have a local fiscal impact statement and actuarial study did not violate the Constitution, due to a precedent in a 2003 Kentucky Supreme Court case.


Shepherd’s decision also said the President Pro Tem of the Senate and Speaker Pro Tem of the House can legally sign legislation under the Constitution, which was also a provision of Beshear’s suit.



In addition, Stivers and Osborne were dismissed as defendants in the case, and Shepherd did not take up the issue of the General Assembly breaking the “inviolable contract” with state employees in their pension plan, since his decision was the legislation violated the Constitution on other grounds.


“Our attorneys are reviewing the 34-page ruling, and at first blush it appears that this ruling puts in jeopardy decades of enacted revisions to Kentucky statutes that have followed the same process as Senate Bill 151,” Osborne said in a statement. “If this ruling is allowed to stand as a landmark decision, Judge Shepherd may have just voided the inviolable contract itself, much of which was passed into law without three readings on three separate days.”

 

For example, the phase-in of increased pension contributions for local governing bodies was also passed in the same manner as SB 151 in the final days of the 2018 General Assembly, and is threatened by this interpretation of the three readings requirement, Osborne said.

 

“The former democratic majority’s 2016 enacted road plan, which spends billions of dollars to improve and build new roads in the Commonwealth, would also contain illegal expenditures, as it was inserted into a different measure dealing with parental rights in the final hours of the session. The 2015 heroin bill, enthusiastically signed by the father of Attorney General Beshear, has incarcerated men and women under those enacted penalties that are also now called into question by Judge Shepherd’s dangerous new precedent.

 

“Judge Shepherd also called SB 151 an appropriation bill, and he is dead wrong. The bill spends no money, something that can only be done by a measure that sets aside dollars for a specific purpose. SB 151 does not do that.”

 

Osborne said he looks forward to the appeal before “there are severe consequences for those who have been well-served by many pieces of legislation passed by the General Assembly.”

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