pensions

After Kentucky Governor Matt Bevin (R) signed a bill overhauling teachers’ pensions, Kentucky Attorney General Andy Beshear promised to “take action.”

In a post to his verified Twitter account, Beshear promised that he would be in court on Wednesday morning to challenge the controversial pension cuts:

Beshear promised to file the lawsuit shortly after the bill’s passage in the Kentucky General Assembly, calling the pension cuts “government at its worst.” The Kentucky Education Association, which is the largest teachers’ union in Kentucky, promised to join the Attorney General’s lawsuit.

The lawsuit will likely challenge the pension cuts on the basis that they violate the “inviolable contract” between the state and public employees that has been in effect since 1993. Essentially, the inviolable contract stipulates that as gratitude for public service, Kentucky employees’ benefits will “not be subject to reduction or impairment by alteration, amendment, or repeal.”

On Tuesday afternoon, Bevin signed Senate Bill 151 into law, which was hurriedly passed on a party-line vote by the Republican-controlled legislature in late March. The bill’s author, Rep. John “Bam” Carney, said the bill would save $300 million over the following 30 years, although the Kentucky pension fund has more than $41 billion in unfunded liabilities after prior administrations borrowed from the pension fund to plug holes in the budget.

The savings in Senate Bill 151 would come from the state reneging on the promise to educators to pay a $5,000 death benefit to spouses of teachers in the event of an untimely death, and by changing all future pensions to cash-only plans after January 1 of next year. The bill also imposes a cap on the number of sick days teachers can accumulate for retirement purposes beginning on December 31, 2018. While Kentucky teachers hired after January of 2014 already receive cash-balance pensions, Senate Bill 151 takes away the guaranteed four percent annual return on those plans for new teachers starting in 2019.

Aside from the bill’s contents, the process of the bill’s passage stirred up anger among many teachers who had successfully lobbied against pension cuts in separate legislation introduced earlier this year. Senate Bill 151 was originally a wastewater and sewage bill, but Rep. Carney snuck in the pension language on short notice, giving lawmakers no time to read the bill before voting on it. Moreover, the bill was passed with no actuarial analysis showing how much the bill costs versus how much it saves, which is a violation of state law.

Neither Attorney General Beshear nor Governor Bevin answered Grit Post’s calls to their cellphones, nor to text messages requesting comment.

 

Logan Espinoza is a freelance contributor specializing in economic issues. He lives in Phoenix, Arizona with his wife and daughter. Contact him at logan DOT espinoza AT yahoo DOT com.

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