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Stymied In 2018, GOP Looks To Try Again On Pension Reform

J. Tyler Franklin

In January, two students died when a gunman shot them in a crowded common area of a western Kentucky high school.

Nearly one year later, Republicans and Democrats in the state legislature have plans for a sweeping school safety bill. The legislation is likely to be a centerpiece of the 2019 legislative session, but funding for a key part of the proposal — more police officers and trained mental health workers in public schools — could be hard to find because of the billions of dollars the state is spending on its troubled public pension systems.

"Everything we try to fund is ultimately colored by the pension problem that we face," said Republican state Sen. Max Wise, who led a group of lawmakers studying school safety. "It is a lot of frustration. It seems like we can't move on to other issues in the state that are priority issues because we continue to be bogged down by the pension crisis."

When Republicans took control of Kentucky's government in 2017, it appeared nothing could stop them as they set out to reshape the state's policies after nearly a century of Democratic dominance. But two years later, pensions — arguably the No. 1 item on the GOP wish list — has still not been addressed.

Kentucky's pension systems are among the worst funded in the country. The state is at least $38 billion short of the money required to pay retirement benefits over the next three decades. Republican Gov. Matt Bevin and the GOP-controlled legislature have significantly increased pension spending, giving the Kentucky Teachers' Retirement System $2 billion over the next two years. That has left little room in the budget for new spending on other services, prompting GOP efforts to make structural changes to the state's pension plans.

Lawmakers narrowly passed a mild pension reform in March only to have it struck down by the state Supreme Court earlier this month. The latest failure came this week, when Bevin called lawmakers back to Frankfort for a special session to pass the pension law again. But the legislature adjourned less than 24 hours later without passing anything.

Republican leaders say the session failed because of confusion over what Bevin was asking them to vote on. Bevin blamed the lawmakers, saying "they came up short of their responsibility as representatives of the people of Kentucky."

And Democrats blamed Bevin, saying it is a sign of his weakness heading into his re-election year that he was unable to muster enough votes for his proposal despite Republicans in firm control of the legislature.

"If they don't take the time to build consensus around it, they will continue to fail," Democratic state Rep. Rick Rand said. "When you are a hammer, everything looks like a nail. That's their approach right now."

Republicans insist the issue won't defeat them, noting voters returned them to power in November after taking a tough vote on a pension proposal earlier this year. In fact, more lawmakers who voted against the pension proposal lost in November than those who voted for it.

"I don't think in any way shape or form it is the death knell of pension reform," Republican Rep. Adam Koenig said of the special session's failure. "It's just ... an egg that's not ready to hatch."

Republicans have focused their efforts on the Kentucky Teachers' Retirement System, which was spared from bipartisan reforms passed in 2013. But thousands of teachers responded by protesting at the Capitol and at lawmakers' town hall-style events in their districts, making it difficult for the legislature to reach a consensus.

The proposal from Bevin's office that failed earlier this week would have done less than what lawmakers had passed earlier this year. But Republican House Speaker David Osborne said "There was nobody particularly interested in doing less."

It's unclear what they will propose instead. Past efforts have included temporarily reducing annual cost-of-living adjustments for retirees. But Republican state Sen. Chris McDaniel, chairman of the Senate's budget committee, said "that's just a place people aren't willing to go."

Democrats say the legislature should find more money for the pension system. Democratic Attorney General Andy Beshear, who is running for governor in 2019, has proposed doing that with money from casino-style gambling and sports betting. But Bevin and other Republicans have rejected that idea, saying it would not bring in enough money to make a difference.

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