FRANKFORT, Ky. (KT) – A long-awaited pension reform bill, filed Tuesday in the state Senate, will not force any current or future government workers into a 401(k)-style retirement plan.
That proposal had sparked boisterous protests, especially from Kentucky’s teachers.
“We heard you, and we adjusted our thinking because of your voices,” said state Sen. Joe Bowen, the Owensboro Republican who sponsored the measure.
The legislation is the culmination of months of debate between Gov. Matt Bevin, lawmakers, government employees and business organizations on a workable means to restore financial solvency to one of the country's worst-funded public pension systems.
Bowen said his proposal will slowly restore Kentucky’s pension systems over some 30 years.
Two controversial provisions have been dropped in the latest proposal: one that would have required teachers and other government employees to pay 3 percent of their income for retiree health benefits and another that would have capped teacher pensions after 27 years of service.
“This reform solves the problem and solves it before the state goes bankrupt,” Bowen said. “It took a long time to dig this hole that we’re in, and it’s going to take a long time to get our way out.”
Bowen said the reform bill was important for “future generations of Kentuckians who were counting on us.”
“We were elected to solve big problems, and this plan unravels the biggest fiscal crisis Kentucky has ever faced,” he said.
Bowen said $3 billion of the state’s General Fund will be allocated for pensions each year.
"Future generations of Kentuckians are counting on us to get this right," he said. "We were elected to solve big problems, and this plan unravels the biggest fiscal crisis Kentucky has ever faced."
Senate President Robert Stivers, R-Manchester, said retired teachers will continue to receive cost of living increases, but there will be a 12-year period when those increases will be cut in half.
Kentucky’s public pension system is at least $40 billion short of the money required to pay out benefits over the next 30 years, according to estimates approved by the state's various retirement systems. Bevin has said the real number is probably twice that much.