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Old 01-10-2018, 01:16 PM
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Mary Pat Campbell
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 87,006
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Kentucky Pension Reform Bill Could Be Imminent
Bill is being analyzed in accordance with impact on state budget.
Although a Kentucky pension reform bill has yet to be signed, it appears as if the mood is set to change, WDRB News reports.

According to WDRB, lawmakers are expecting a bill to be filed “within days.”

“We’ve had some issues that have kind of knocked us off the track, but we’re ready to get back on the track now,” House Majority Whip Kevin Bratcher told the publication.

The issues Bratcher is referring to are regarding a sexual harassment scandal involving Speaker Jeff Hoover, which derailed chances of a special session at the end of last year, as well as consuming the first week of legislation.

According to WDRB, the bill is being analyzed in accordance with how it will affect the state budget, which goes into effect July 1. It also seems that Kentuckians will be getting a very different bill than what Gov. Matt Bevin proposed in October, such as dismissing the idea to transfer current employees into a 401(k)-style plan after 27 years of service.

“I’m hopeful that sometime this week, we can get a bill filed,” Senate Majority Floor Leader Damon Thayer told WDRB. “It’s going to be watered down from the original proposal, there’s no getting around that.”

The bill will need 51 votes to pass, and while Democratic support may be a challenge, Bratcher remains optimistic.

“It’s something we have to tackle,” Bratcher said. “We cannot continue to kick the can down the road, and we’re not going to.”

Judge blasts Bevin's 'ill-advised' tactics but allows reorganization of pension board to stand

FRANKFORT, Ky. — Franklin Circuit Court has dismissed the lawsuit challenging Gov. Matt Bevin's 2016 reorganization of the Kentucky Retirement Systems board but scolded the Bevin administration for its early tactics to enforce that order.

Judge Phillip Shepherd ruled on Monday that the once high-profile challenge to the governor's reorganization powers is now moot because the 2017 Kentucky General Assembly passed a bill affirming Bevin's order restructuring the board.

The lawsuit was filed by Tommy Elliott, a board member appointed by former Gov. Steve Beshear, who was removed from the board by Bevin's order. Joining Elliott in filing the suit was Mary Helen Peter, a member of the board who was not removed by Bevin's order.

Elliott had argued that the term of his appointment by Beshear had not expired and Bevin lacked the power to remove him. And after Elliott initially ignored Bevin's order, the governor's chief of staff and the Kentucky State Police went to the next board meeting and threatened to arrest Elliott, Shepherd said.

More: Kentucky pension reform bill's funding method may kick 'kids in the teeth,' critics say

See also: A Kentucky pension bill has yet to be filed, but there are a few hints on its contents

More: Mayor Fischer calls for Kentucky to adopt 'luxury' tax to tackle pension crisis

Shepherd described this action by Bevin to enforce his order as "wholly unjustified ... rash and unprecedented ... ill-advised and extra-legal."

"The Commonwealth of Kentucky is not a police state," Shepherd wrote.

But the judge said that the legislature's passage of a law adopting Bevin's reorganization made the lawsuit moot, and dismissed it. He also dissolved a prior order that has allowed Elliott to continue to serve on the board while the case was pending.

Democratic Attorney General Andy Beshear joined the case early, arguing Bevin had exceeded his authority. And Republican Treasurer Allison Ball joined the case to challenge payment by the retirement systems of the legal fees of Elliott and Peter.

Shepherd ruled Monday that Elliott and Peter are entitled to have the retirement systems pay their legal fees.

"The legislature has provided for payment of attorney's fees to board members who in good faith bring or defend legal actions concerning the discharge of their statutory and fiduciary duties. This action brought by Mr. Elliott and Ms. Peter is just such a case," Shepherd ruled.

The governor's spokeswoman Amanda Stamper said in an email responding to the ruling that the Bevin administration is "glad another one of the attorney general's many politically motivated lawsuits has been dismissed."

Beshear released a statement noting Shepherd said that the case raised important legal questions.

"But, the court ruled that the General Assembly had once again bailed out the governor through new legislation," Beshear said.

Pension in peril puts university at risk
The Kentucky pension reform proposal is scheduled to take place Jan. 16. The budget proposal entails many budget cuts, as well as suggestions for tax reform and revenue boosts.

The pressing question resides in the obvious. How will this affect students at U of L?

There is a section within the released proposal about funding for universities shifting to “outcome based funding.” This means funding will be distributed based on performance criteria.

U of L’s fiscal year budget shows funding decreases across nearly all departments. This could mean tuition increases and additional fees.

Such cuts are unfortunate, especially for certain departments. When budget cuts come down the pike, the arts are usually the first to suffer. This is evident in the university announcing in fall 2017 they were pulling advertising funding for The Louisville Cardinal, the independent school newspaper.

The budget cuts from the Kentucky pension reform proposal, which will total $158 million across the three branches, will undoubtedly have more impacts on the state.

These cuts, though concerning, are crucial to manage Kentucky’s state pension fund, as well as various rainy day funds and potentially secure a halt in the state debt. Currently, Kentucky’s state pension is among the worst funded pensions in the United States, according to

The debt is a problem we have known about for many years. Rather than addressing it, previous administrations have ignored it. Regardless of political affiliation, the problem cannot be solved by ignoring it.

The debt cannot be solved by spending more money than is available through tax revenue. For example, let’s say you make $500 a week at your full-time job. If you spend more than $500 every week, then you will not have any money to survive. This is grossly simplified, but serves as an example nonetheless.

At any rate, something done now can aid our future. Either the system will collapse or its demise can be altered. Ignoring the issue will not make it go away, and neither will throwing money at it. It is time for us to tighten our belts and hope the solution presented will work.

Kentucky Mayor Pushes for State Luxury Tax to Aid Pension Problems
Officials hope reform is adopted before next fiscal year begins.
To help increase funding for Kentucky’s pension predicament, Louisville Mayor Greg Fischer suggested last week that lawmakers tax luxury items, warning that huge pension payments could lead to large city budget cuts in 2018.

“We’re always ready to deal with the unexpected, but this will be difficult for the people of Louisville and force metro government to reduce consistent services,” he told the Courier Journal.

During his annual State of the City Address, Fischer made his proposal and also touched on various issues from investments to creating opportunities for the community.

According to The Journal, Fischer’s officials told Metro Council last month that the city would have to spend $115 million on pensions—$38 million more than this fiscal year—if no drastic changes to the retirement system were made. , TheJournal reports that this is the biggest one-year surge metro government has faced.

City officials say that Louisville is projecting $20 million to $25 million more in budget revenue growth compared to 2016. Fischer urged lawmakers to combine pension reform with tax code changes during the 2018 legislative session, which is now underway.

“Kentucky’s communities have critical needs in terms of education, health, social services, and infrastructure, [and] to meet them, Frankfort must broaden the tax base,” Fischer said. “We need to take a hard look at a tax code that exempts luxury items. It doesn’t make any sense to consider cuts that can hurt a child’s classroom, law enforcement, drug treatment, or our justice system when we don’t tax country club members and limousine rides—that’s just not right.”

The Journal notes that depending on whether a pension reform is adopted before the start of the next fiscal year, Louisville pension payment amounts could change, with city officials optimistic on paying off the obligation in phases if the $38 million sum remains.

When asked if local taxes could be increased should the state legislature not come to a reform, Fischer said that his administration is reviewing its budget, but is also watching to see what happens at the state level.

“We don’t look at taxes until the very last option, (and) the council would have to agree with that as well,” he said.

Kentucky pension reform bill's funding method may kick 'kids in the teeth,' critics say
FRANKFORT, Ky. – An emerging concern over the pension reform bill about to be filed in the General Assembly is that it may call for increased funding for the plans by hundreds of millions of dollars more than necessary.

Those who voice this concern say the funding approach strongly endorsed by Gov. Matt Bevin and fellow Republicans who control the House and Senate will force much deeper cuts to public schools and other priorities in the state budget.

“People who hold this position are going to be accused of kicking the can down the road again on pensions. But it’s a question of how much and how quickly we need to put more money into pensions,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy in Berea. “My concern is we will be kicking kids in the teeth if we do the kind of budget cuts” that would be required under the new pension funding approach.

Eric Kennedy, director of governmental relations for the Kentucky School Boards Association, said that without a big boost in revenue through tax reform the new funding method — called "level dollar" funding — is likely to result in draconian cuts at public schools. He said the method would lead to school funding that is “unbearable in every classroom and unacceptable to every business owner that depends on us to educate tomorrow’s workforce.”

More about pension:

A Kentucky pension bill has yet to be filed, but there are a few hints on its contents

Mayor Fischer calls for Kentucky to adopt 'luxury' tax to tackle pension crisis

Gov. Matt Bevin won't call special session on pensions, warns budget will be a 'doozy'

Kentucky pension reform: Beshear says law protects retired teachers' pay increases

Level dollar funding was strongly endorsed by the consultant to the Bevin administration as crucial to correcting the problems that helped create Kentucky's massive retirement system debts that are now officially listed at $43.8 billion.

John Chilton, budget director for the Bevin administration, has said this approach is vital to take an immediate bite out of that debt. Chilton declined to be interviewed.

But House Majority Leader Jonathan Shell, R-Lancaster, said, “We’ve not put the level of funding that we probably should have in those funds. … It’s time we make sure we implement the funding that is necessary, across the board. And we feel that 'level dollar’ does that.”

But Bailey has been arguing for months that while much more money is needed in pension funding, the level dollar approach would require hundreds of millions of dollars more than necessary to make solid progress in paying down the debt.

Moreover, Bailey said most of the new money under level dollar funding will go to the Teachers’ Retirement System rather than the worst-funded state pension plan, the plan for those in non-hazardous occupations. It covers most state workers.

Without new revenue, and unless lawmakers decide to phase in the new funding approach, Bailey said the move is an "overreaction to past underfunding that would set up unprecedented budget cuts.”

He said it "will massively front-load the costs of paying down liabilities while asking relatively little of the budget two and three decades from now.”

More background: Louisville's pension costs to go up a whopping $38M, threatening to wipe out new revenue

More: Pension reform, taxes and the budget: Matt Bevin reaches his defining moment as governor

Bevin and Republican leaders released a pension bill in the fall that called for certain benefit cuts, a gradual transition from traditional benefit plans to 401(k)-like plans, and level dollar funding. But the bill never won enough support among House Republicans, and Bevin’s hope to pass pension reform at a 2017 special legislative session was deferred. Now Republican legislative leaders hope to pass a revised bill early in the regular session.

The revised bill that addresses concerns about benefit cuts is likely to be filed this week. And on Jan. 16, Bevin will propose a state budget for the two-year period beginning July 1. Both are expected to call for the new pension funding approach.

The governor has warned that the budget will include deep spending cuts so that spending matches available revenue. “I think you’re going to see a realistic budget, one that for the first time in a long time encapsulates the true cost of doing business in Kentucky. And it won’t be as pretty as people would like,” Bevin said last week in an interview with Kentucky Today, a Bevin-friendly online publication of the Kentucky Baptist Convention.

Traditionally, the state’s annual required contributions to its pension plans are calculated by actuaries as a percentage of the state’s payroll. Most states use this approach, which anticipates that government contributions grow year-to-year as government payroll and revenues grow.

But the level dollar approach is like a home mortgage payment, requiring the state to pay the same amount per year for each of the next 30 years as it pays benefits while paying down the debt in the retirement plans.

This method is necessary, advocates say, because government payroll growth is weak or flat. But it requires much bigger payments than the current funding method during the early years.

Bailey said some significant funding increase is needed for the main pension plan, the one that covers non-hazardous occupations. It is the worst-funded pension plan in America with only 13.6 percent of the money it needs to pay its obligations.

But he said he believes the current funding method is a responsible one that moves the plans toward recovery if assumptions used by actuaries are reasonable and the legislature fully funds what actuaries say is required. He said Bevin and the legislature took an important step two years ago by boosting state pension funding by more than $500 million per year.

Level dollar funding, he said, will particularly require more state funding than is necessary for the Teachers’ Retirement System.

Bailey said the teachers' system situation improved last year and now reports it is 56.4 percent funded. Its actuary has said an increase of $104 million is needed next year under the current funding method. But a recent presentation by the Legislative Research Commission staff said the level-dollar approach will require $392 million more next year the plan, in addition to the $104 million.

“With the big stride in the last budget, we are well on our way already,” Bailey said. “… Simply slashing K-12 education, making higher education even less affordable and reducing access to services for the most vulnerable is not a viable option.

Brent McKim, president of the Jefferson County Teachers Association, said that “paying under the level dollar approach would be great for the pension plan, but I can’t justify paying more than what is necessary given the other needs we have in a very dire state budget.”

Judge dismisses lawsuit questioning Kentucky governor’s ability to restructure pension fund board
2016 lawsuit against Gov. Matt Bevin's reorganization of the Kentucky Retirement Systems' board was dismissed by a Franklin Circuit Court judge Monday.

Judge Phillip J. Shepherd wrote Monday that while the lawsuit "raised valid legal questions," legislation passed in 2017 ratified most of the governor's reorganization, making the lawsuit moot.

Through an executive order in June 2016, Mr. Bevin disbanded the Frankfort-based Kentucky Retirement Systems board of trustees, replacing it with the Kentucky Retirement Systems board of directors. The new board had 17 directors— the 13 who were on the previous board of trustees and four new appointments by Mr. Bevin, which included the state budget director. On the previous board of 13, six were appointed by the governor. Along with restructuring, Mr. Bevin ordered that any executive director appointed by the board must also be approved by governor and mandated that all investment holdings, fees and commissions, contracts or offering documents be available online.

Shortly after the reorganization, two board members and state Attorney General Andy Beshear filed a lawsuit challenging the governor's power to restructure the board. In early 2017, while a ruling on that lawsuit was pending, the Kentucky Legislature ratified most of Mr. Bevin's order.

One lawsuit plaintiff was ousted board Chairman Thomas K. Elliott. Through a separate executive order in April 2016, Mr. Bevin removed Mr. Elliott as chairman, citing a need for a "fresh start and more transparency." At a board meeting shortly after Mr. Elliott's removal, members of the governor's office and state troopers threatened Mr. Elliott with arrest if he participated in the meeting, according to William A. Thielen, executive director of the $12.1 pension fund at the time. Mr. Shepherd wrote that the use of state troopers to enforce the governor's orders was "ill-advised. ... The commonwealth of Kentucky is not a police state," he wrote.

In a statement Monday, the attorney general remained hopeful that a lawsuit about Mr. Bevin's reorganization of state education boards would succeed in the Kentucky Supreme Court. "Today, the court ruled that our lawsuit raised 'profound and legitimate questions concerning the scope of the governor's reorganization power,' and that Gov. Bevin engaged in outrageous and unlawful conduct in sending 'armed officers of the Kentucky State Police' to threaten a board member," Mr. Beshear said. "But, the court ruled that the General Assembly had once again bailed out the governor through new legislation. However, as the court noted, our education board lawsuit is headed to the Kentucky Supreme Court, where we will seek a final ruling that the governor cannot ignore and rewrite Kentucky law. I will continue to defend our constitution and the liberties it provides for our Kentucky families."

Unlike the reorganization of KRS, there has not been legislative action on the reorganization of the education boards.

In a separate statement, Amanda Stamper, a spokeswoman for Mr. Bevin, said: "We are glad another one of the attorney general's many politically motivated lawsuits has been dismissed. It is sad Attorney General Beshear continues to play politics with Kentucky's pension system, which became the worst funded system in the country under his father's administration. After the circuit court denied the attorney general's motion to temporarily enjoin the governor's reorganization of the Kentucky Retirement Systems board, the Legislature confirmed the reorganization into statute, rendering the AG's suit moot."


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