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Kentucky governor reaches out to lawmakers on pension issue

May 8, 2019

FRANKFORT, Ky. (AP) — Gov. Matt Bevin says Kentuckians are depending on lawmakers to “do the financially responsible thing” as he seeks support for his struggling pension-relief proposal.

The Republican governor sent a letter to lawmakers Wednesday promoting his measure and outlining his views on multiple issues involved in the pension mess.

It shows the complexity of both the pension problem and the task of building support for the relief measure in a special legislative session he wants to call.

Bevin said he opposes merely freezing pension contribution rates for regional universities and quasi-public agencies for a year while lawmakers work on a pension proposal for next year.

“The days of ‘kicking the pension can down the road’ are over,” Bevin wrote.

Bevin reached out to lawmakers after some of their leaders said recently his proposal lacked the votes to pass in the Republican-dominated House.

“I truly appreciate the difficulty in the decision before us,” Bevin said in his three-page letter. “Future generations of Kentuckians are depending on us to do the financially responsible thing.”

Inaction, he warned, would strain the state’s quasi-public agencies and lead to some bankruptcies, elimination of staff and loss of critical services for Kentuckians.

House Speaker David Osborne responded that House Republicans are involved in a “deliberate process to ensure that this is the very best product possible given the circumstances we have inherited.”

GOP House members are “acutely aware” of the pension issue’s importance for regional universities and quasi-governmental agencies, Osborne said in a statement. He said the governor’s efforts show he’s “equally committed” to the issue.

Bevin said his proposal “meets Kentucky’s legal parameters” and is consistent with past legislation supported by the lawmakers. The governor said he’s prepared to call the special session as soon as enough House and Senate members signal they’re prepared to take action.

His letter lays out “the gravity of the pension crisis” facing regional universities and many critical state-funded agencies. Those universities as well as county health departments, rape crisis centers and many other quasi-governmental agencies face ballooning pension costs on July 1.

Bevin’s plan has been endorsed by regional university presidents and picked up support from some representatives of local health departments, mental health centers and other agencies.

His proposal replaces a pension measure that he vetoed after lawmakers passed it in late March. His action took legislators by surprise.

Legislative leaders have said it’s up to Bevin to craft a new bill and line up support. The governor is grappling with the politically treacherous issue as he seeks reelection this year.

Bevin’s team has briefed lawmakers and provided financial and actuarial reviews of the proposal.

His proposal allows the agencies to stay with the Kentucky Retirement Systems at full cost; leave the retirement system by paying a lump sum equal to future projected benefits payments; or buy their way out in installment payments over 30 years. It extends a freeze on pension costs for another year for the regional universities and quasi-public agencies.

Bevin’s letter said it’s his understanding some lawmakers are withholding support unless the proposal includes language allowing some employees to decide to stay in the system even if their employers exit it.

“This concept is wrought with legal issues, a heavy financial cost and a crippling administrative burden,” Bevin wrote.

Responding to Bevin’s letter, House Democratic leaders said their caucus wants to resolve the issue but said the governor’s proposal “isn’t the solution we or Kentuckians were promised.”

“We continue to believe the pension problem is too large to be solved by the governor and a few people in closed-door meetings,” the Democratic leaders said in a statement. “We call upon the governor to open the process up to both chambers, both parties, the public and experts.”