Legislators: Bevin must lead pension talks after veto

April 11-- Apr. 11--Gov. Matt Bevin's veto of the only pension-related bill lawmakers passed during this year's legislative session means quasi-government organizations such as health departments and rape crisis centers could see large increases in their pension expenses on July 1.

One of the affected agencies is the Green River District Health Department.

Clay Horton, the department's public health director, said for every dollar of salary the agency pays, it puts 49 cents into the public employee pension system.

Unless something is done, that amount will increase to 84 cents on July 1, Horton said.

"We are hopeful for a solution," Horton said Wednesday. If not, "we are going to have a substantial increase in our personnel costs next year."

To absorb those costs, the health department would likely have to reduce personnel, Horton said, which would "end up with less oversight" and fewer services to the public "that is going to create vulnerabilities."

"It really would have a significant impact on Daviess County and our seven-county region," Horton said.

On Tuesday, Bevin vetoed House Bill 358, which was geared toward reducing pension increases to quasi-government agencies such as health departments, rape crisis centers domestic violence shelters and certain colleges.

The bill would have kept contribution rate at 49 percent for another year, while creating a mechanism for quasi-government organizations to leave the Kentucky Employees Retirement System, provided they pay predetermined fixed cost for current and former employees in the retirement system as of the day the agency leaves. The bill also provided a way for employees to stay in KERS even if the employer decides to leave the system.

In his veto message, Bevin said he had concerns that agencies would leave the system then default on their payments, resulting in retirees losing their pension and health insurance benefits.

Bevin's statement says he intends to call a special session for lawmakers to address his concerns in the bill before July 1.

Rep. Suzanne Miles, an Owensboro Republican and majority caucus chairwoman, said she was disappointed by Bevin's veto because lawmakers put "a tremendous amount of work into the bill."

"There were several (quasi-government agencies) that made it clear they would have to close their doors" if their pension liability increases to 84 percent on July 1, Miles said.

The affected agencies "were very appreciative and very pleased with the results" of the bill, Miles said.

Rep. Jim Gooch, a Providence Republican, said lawmakers were working with the understanding that Bevin would not call a special session.

"We knew there were some serious issues there, and we were under a time constraint to get something done," Gooch said. "... We were under a lot of pressure to come up with something the House and Senate could agree on."

Sen. Robby Mills, a Henderson Republican, said Bevin's veto creates "uncertainty" among the affected groups.

"Now that he's vetoed the bill, we have to create some certainty," Mills said. "It wasn't perfect, but some of the things that weren't perfect could have been looked at in 2020."

The consensus among area lawmakers was that Bevin would have to take the lead on a new bill.

"I'd look to him to come up with a better solution than we (delivered) so far," Miles said. "... It is the governor's opportunity to provide a solution to us."

Rep. Melinda Gibbons Prunty, a Belton Republican, said Bevin does need to provide guidance to legislators on how to proceed.

"I hope he's got some ideas," Prunty said.

The plan should be in place before lawmakers are called back to Frankfort, to avoid what happened in December, when Bevin called a special session on pensions that ended with no action, Prunty said.

"We hope the solution is worked out before we get there ... so we don't have what we had in December again," Prunty said.

Rep. Scott Lewis, a Hartford Republican, said the veto "came out of the blue."

"It's a tough issue, and it's going to take some creative thinking," Lewis said. "...The problem is you have to have the House, the Senate and the governor on the same page."

Lewis said lawmakers have to "come up with a way for our people to stay in (KERS) instead of opting out."

"If the rates continue to go up, everyone is going to opt out," Lewis said.

Rep. Jim Glenn, an Owensboro Democrat, said the problem with the state's pension system cannot be addressed piecemeal.

"We have to figure out how to handle the problem and stop working around the edges," Glenn said. "The problem is going to take 20 years to solve."

The state, Glenn said, should create a "department of pension debt management" and should "stop playing politics and manage the debt problem."

"Somebody needs to be working on this every day," Glenn said.

James Mayse, 270-691-7303, [email protected], Twitter: @JamesMayse

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