Kentucky pension system

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A House bill aiming to help generate revenues for the underfunded pension system is in legal limbo as the Senate refused to accept the bill.

House Bill 416 takes revenues from expansion of Instant Racing and online lottery sales and the start of a Keno game to generate close to $100 million a year to pay into state's currently underfunded pensions for state employees.

Revenue bills in odd-year sessions must have 60 House votes in final passage to be considered within the rules; House Bill 416 only received 52 on the floor. Because of that, the Senate clerk refused to accept the bill.

But House Speaker Greg Stumbo says the Senate should amend the bill and send it back to the House for final passage if it wants to avoid a special session.

Legislative pension reform is progressing through the Kentucky General Assembly. Senate Bill 7 would keep new legislators from participating in the Kentucky Employees Retirement System. It is aimed at preventing the addition of new burdens to Kentucky's pension system, despite the fact that legislator's pensions are generally well-funded.

Senate President Robert Stivers praised the bipartisan effort in his chamber to solve Kentucky's underfunded pension problem.

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The House has narrowly passed two bills dealing with the state's underfunded pension system, but not without controversy.

The House passed an amended  version of Senate Bill 2, which keeps the pension systems as a defined benefit and creates a new oversight panel for Kentucky's many pension plans. It passed on party lines 55-45, with Democrats favoring.

It also passed House Bill 416, which takes revenues from the potential expansion and legalization of Instant Racing, from online lottery sales and a new Keno game.

That bill passed with 52 votes, but many Republican members argued that the action was illegal, since revenue bills take a House supermajority of 60 votes to pass in odd-year session.

The House budget committee has passed a bill that would help shore up the state's underfunded pension system. House Bill 416 would take revenues from expanding Kentucky lottery sales and online games, as well as from Instant Racing if the state Supreme Court upholds the legality of the game.

House Speaker Greg Stumbo says the bill would generate at least $100 million a year to be put into a trust fund for pensions.  And he says using money from lottery sales won't hurt scholarship funds tied to lottery profits.

"Those are left harmless, they'll still be funded. And they'll be allowed 2 percent growth in this proposal so they'll still continue to grow," Stumbo said.

Photo by Bud Craft, courtesy Ky Legislative Research Commission.

The state pension system would not transition to a hybrid 401K-style plan in an amended version of the pension reform bill.

New Kentucky Senators Want Pension Opt-Out

Feb 19, 2013

Some new state legislators were elected after promising to refuse a state pension, but now find the law does not allow them to opt out. However, State Rep. Diane St. Onge has introduced a bill that would allow them to make good on their promise. The Madisonville Messenger reports that the measure would allow any lawmaker to opt out of the state pension system and would prevent any new legislator elected after July 1 from entering it. Incumbents would not have to drop the pension plan under the legislation.

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Kentucky House leaders are considering legalizing Instant Racing across Kentucky to help plug the funding gap in the state's pensions.

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Pension reform legislation that passed in the Senate last week is undergoing changes in the House. House Speaker Greg Stumbo says he expects some of the proposed changes to be unveiled this week.

The version that cleared the Republican-controlled Senate requires the state to make its full contribution to the pension system but doesn't identify a funding source to do that. Stumbo says the Democratic-led House wants a designated funding source.

John Walker

Lawmakers and citizens met this weekend in Murray State’s Wrather Auditorium to discuss Kentucky’s ongoing pension crises. Cameron Smith of the Alabama Policy Institute gave a presentation explaining Kentucky’s current pension problems while lawmakers answered questions. Smith said it’s important for the state to keep its promises.

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The Kentucky Senate has passed a bill that would reform the majority of the state's pension system. Senate Bill 2 contained the recommendations of a legislative task force on the underfunded pension system. It suspends cost of living adjustments and creates a hybrid, 401k-style pension plan for new hires.

Bill sponsor Damon Thayer says the bi-partisan support for the bill shows the need for continued cooperation on pensions.

"This is not a perfect bill. There are certainly other ways that this can be done," Thayer said. "But in this town and in this building, when have we ever given up the good for the sake of the perfect. This is a good bill, Mr. President."

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