With Kentucky’s regional universities and other agencies facing a massive spike in pension costs starting July 1, Gov. Matt Bevin’s office says he won’t call a special legislative session to address the issue until later in July or August.
The delay means that the agencies will rack up larger-than-hoped-for pension costs, which will be due at the end of July, and which stakeholders say could lead to cuts in services or even closures.
Brian Sunderland, Gov. Bevin’s deputy chief of staff, says there’s a grace period and as long as a bill passes before mid-August, the agencies will be able to avoid the increased costs.
“If we get it done before that deadline, I believe that it will be able to address the issue,” Sunderland told reporters on Monday.
Bevin has had trouble rallying support for his proposal to allow the agencies to buy out of the pension system amid concerns that the measure would weaken retirement benefits for employees and violate contract rights.
But Sunderland also said the governor’s office has had trouble ensuring that enough lawmakers who support the bill will be in town to vote in favor of it.
“A lot of people are going a lot of places and doing a lot of things,” Sunderland said.
Bevin’s proposal would allow regional universities or “quasi” state agencies like local health departments to avoid higher pension costs by either paying a lump sum to the state or paying installments over the next 30 years.
It would also provide a discount to agencies that exit the system if they elect to freeze the pension benefits of their employees and move them into 401k-type plans moving forward.
Sunderland said he’s confident there are enough votes to pass the bill out of the Republican-led legislature.
“I believe that it strikes that necessary balance between protecting the services, the employees, the pensions they’ve been promised and making sure that we’re putting as much into those pensions as we can,” Sunderland said.
Most of the opposition to Bevin’s plan has been in the 100-member House of Representatives, where all Democrats and some Republicans have expressed worries that the bill wouldn’t protect benefits of employees already in the system.
Minority Whip Joni Jenkins, a Democrat from Louisville, said that the bill would draw a legal challenge if it passed.
“My interpretation of it is that we are incentivizing employers to get out of the system and take all their employees with them. And I think should they do that it would violate the inviolable contract,” Jenkins said.
Jenkins also argues that the measure is an appropriations bill, meaning it takes a three-fifths majority to pass it out of the state House and Senate.
Bevin’s office argues that it isn’t, and that it only takes a majority of members in each chamber.