Governor vetoes pension bill, calls for special session

Gov. Matt Bevin introduces Vice President Mike Pence. “He was a man that was supportive of me because we shared certain core values,” Bevin said about Pence, “Things that we believe the principles of America were founded upon.”

Nicole Ziege

Gov. Matt Bevin vetoed a controversial pension relief bill on Tuesday that would have stabilized costs for WKU and other public universities, as well as many state-funded agencies as they face a dramatic increase in the Kentucky Employee Retirement System pension costs in July.

Bevin said in his message that House Bill 358 would have likely resulted in a suspension of pension and health insurance benefits that retired employees from “quasi-governmental employers” already earn.

These employers include local and district health departments, domestic violence shelters, rape crisis centers, child advocacy centers and any other agencies eligible to opt out of KERS. Like the public universities, they face a dramatic increase in employer contribution costs.

Additionally, Bevin said many of the KERS employers added onto the bill would not be able to pay off their unfunded pension liability within the 30-year deadline.

“While I appreciate the work of our legislators who worked diligently to protect the services provided by many quasi-governmental entities, parts of HB 358 violate both the moral and legal obligation we have to these very retirees,” Bevin wrote in his message.

Bevin said he will call a special session of the Kentucky General Assembly before July 1 “to provide the relief necessary to protect the solvency of these entities and their ability to provide services.”

HB 358 was intended tohelp address the cost of KERS and provide retirement options to higher education institutions and their employees. The bill also declared an emergency regarding the potential financial increase Kentucky’s public universities face with their employer contribution costs.

KERS is one of two state retirement systems WKU currently participates in, the second being the Teachers Retirement System.

Through KERS, the current employer contribution rate for Kentucky’s public universities is about 49.5% of each employee’s salary. These public universities include WKU, Northern Kentucky University, Eastern Kentucky University, Morehead State University, Kentucky State University, Murray State University and the Kentucky Community and Technical College System.

The bill would have postponed a proposed rate increase from 49.5% to 83.4% for another year. It also would have allowed participating universities to receive a 25-year payout requirement for the unfunded pension liability.

Under the bill, universities could voluntarily cease participation from KERS and would then need to follow certain requirements in place of their participation. The universities would have needed to create their own alternative retirement programs, which would need voluntary defined contribution plans similar to a 401(k).

The bill could have affected about 31,000 KERS employees in the state of Kentucky. 

News reporter Nicole Ziege can be reached at 270-745-6011 and [email protected] Follow her on Twitter at @NicoleZiege.