FRANKFORT, Ky. (KT) – The leaders in the General Assembly said it is not likely that lawmakers will take away cost-of-living adjustment previously given to retirees as part of the overhaul of the Kentucky pension system for public workers.
Eliminating the cost-of-living adjustments that state and local government retirees received between 1996 and 2012 was one of the more controversial proposals by a consulting firm hired by the Bevin Administration to fix Kentucky’s broken pension system.
“I think it’s highly unlikely that is going to take place,” said House Speaker Jeff Hoover, R-Jamestown, talking to reporters Wednesday after a meeting of legislative leaders.
Senate President Robert Stivers, R-Manchester, said lawmakers will pound out their own plan instead of relying completely on recommendations of the PFM Consulting Group.
“The final say-so, and what will be presented to the Governor at some point in time, will be done by the General Assembly,” he said. “I have yet so see that PFM has a seat in any Chamber.”
Hoover agreed with Stivers, saying lawmakers will do “what we believe is the best approach forward and what we believe our members will adopt and pass.”
When asked if expanded gaming could play a role in framework both Hoover and Stivers didn’t see it as a possibility.
“I haven’t heard it discussed,” Hoover said.
“Never have,” agreed Stivers.
An anticipated special session to shore up the public pension plans hasn’t been officially called yet by Gov. Matt Bevin but lawmakers are discussing the reform in preparation.
“There are good discussions going on about the information that was released by PFM,” Stivers said. “To say when we may have a special session would be premature and somewhat of a moving target at this point.”
Hoover has expressed no timetable for action, saying legislation needs to be in bill draft form that members can read and discuss with constituents before any vote could be made.
Hoover said whenever a pension reform bill is passed, it will not take effect immediately.
“There will be plenty of time for current employees to consider their options and what they want to do and have full understanding to make an informed decision,” said Hoover, who said he’d prefer to deal with the issue in a special session.
While Stivers said he would prefer not to have a special session, the circumstance “I believe rises to that level. It will have a budget impact, so before we can start drafting a budget next year, we need to know where we’re going and what we’re going to do, as it relates to funding pensions.”
Stivers’ bottom line is something needs to be done soon.
“The Kentucky Employees Retirement System has about $1.8 billion left in it. We’re drawing that to the tune of three to four hundred million [annually]. Simple math tells me 18 divided by three is six. So, in six [years], there will be zero there.”
“This has implications on constituents, on people’s livelihoods in this state. And it has tremendous implications on the budget we’ll put forward in the next session.”
As for where they go from here, Hoover said lawmakers are continuing to work on the topic.
“It seems like every meeting produces more questions and we need more information from [LRC] staff. Once we have a framework of where we are and what we think we can do, then staff will begin drafting a bill. We’ve been told that’s a four-week process.”
Retirements from one of Kentucky's largest public pension systems jumped 37 percent in September.
The Kentucky Retirement Systems says 746 people retired as of Sept. 1 compared with 543 retirements one year ago. The retirements included state workers, police officers, firefighters and other local government workers.
Kentucky taxpayers are at least $33 billion short of the money required to pay retirement benefits over the next 30 years.
The Associated Press contributed to this report.