FRANKFORT, Ky. (LEX 18) — With Thursday marking the final day for lawmakers in Frankfort this session, some experts see the possibility of big changes — including, perhaps, on the hot-button issue of pensions — as the clock winds down.
Teachers have been at the forefront of the fight over possible changes to the way pensions are administered in the Commonwealth. However, on Thursday another group — so-called quasi-governmental organizations — could see the biggest changes.
“The health departments, the universities, the community mental health centers, and domestic violence shelters and so forth,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy, of the groups that face possible legislative action.
Thanks to changes made in 2017, things are about to get complicated. Starting in July, employers will be required to pay a lot more money on their employees’ pensions.
“It went up from 49 percent of their pay to 83 percent of their pay,” said Bailey.
The problem, according to experts, is that many won’t be able to shoulder the costs. So some are warning it could result in job cuts, educational cuts at regional universities and less money for health departments to address emergencies like the hepatitis A outbreak.
“There are about 40 health departments that have less than a year of cash reserves, so they’re at risk of going under,” Bailey said. “We already had one community mental health center declare bankruptcy.”
Lawmakers could stop this with new legislation.
The House and the Senate have come up with different bills.
Gov. Matt Bevin has indicated support for the Senate bill, but critics say it breaks the “inviolable contract” promised to pensioners in the state constitution.
“Nine thousand employees would have their pension benefits immediately frozen,” Bailey said, “so they could not earn those pension benefits for the remainder of their career.”
For someone halfway to retirement, about one-third of their retirement benefits would vanish.
Lawmakers also could pass another solution on the final day of the session, but that would give Bevin the final say.
“If they pass something he doesn’t approve of and he vetoes it,” Bailey said, “then the increases will go into effect on July 1st.”