After weeks of anticipation and months of discussions and meetings with stakeholders, the Kentucky Senate Majority Caucus filed its comprehensive pension reform bill as Senate Bill (SB) 1 on Tuesday, February 20. While SB 1 marked the filing of one of the most significant pieces of legislation of the 2018 Session, we continued to hold committee meetings and voted bills out of the Senate chamber, making for another busy week in Frankfort.
In SB 1, our goal is to balance the harsh reality of the fiscal health of the retirement systems with the expectations of current public employees, teachers, and retirees. We worked to do just that while respecting the taxpayers of the Commonwealth, many of whom do not have a retirement plan of any kind. I am proud to report that Senate Bill 1 is a data-driven plan that reflects hard work, numerous revisions, and most importantly, input from public employees. We listened to your feedback and this plan reflects that. I am proud to cosponsor SB 1.
This plan does not place any future state employees into a defined contribution, or a 401(k)-style, retirement plan, and it will not force any current or future state employees into a 401(k) plan. It will not create a retirement “cliff” by preventing current employees or teachers from accruing more service credit in their defined benefit plan.
This proposal solves Kentucky’s $40 billion unfunded pension problem by changing how state government funds pensions. Kentucky will convert to a “level dollar funding formula” which means the unfunded liability will be completely paid off within 30 years by making a large payment each year—just like paying off a home mortgage. Under this funding plan, the retirement systems will receive hundreds of millions more in funding each year, going above and beyond the minimum payment to more quickly pay down the debt. I look forward to continuing the pension discussion as the bill moves through the legislative process.
One of the first pieces of legislation we passed this week was Senate Resolution 149, which recognizes the role the hospitality industry can play in disrupting child sex trafficking and encouraging residents, employees, and agencies to use hotels and venues which are signatories of the Tourism Child-Protection Code of Conduct, known as The Code. The Code is a voluntary multi-stakeholder initiative with the mission to provide awareness, tools, and support to the tourism industry to prevent the sexual exploitation of children.
We also passed a number of other bills in the Senate this week: Senate Bill 119 lays out the legal carcass disposal methods for cervid (deer) meat processors; Senate Bill 149 and SB 126 are both reorganization bills for the Cabinet for Health and Family Services; Senate Bill 109 updates the statutory definition of rape to help protect people from this heinous crime; and House Bill 74 aims to deter the resale of stolen goods to pawnbrokers by making the pawnbrokers’ registers more transparent and requiring secondhand merchandise sold to a pawnbroker to be held a minimum of 12 days before being resold.
The budget is still in the hands of the House of Representatives, but we expect to receive it in the Senate in the coming weeks. We have already begun an intensive review process, and once it is in our possession, we will continue that process while making our own changes. It is a lengthy and strenuous process, but I am confident that the final product will be fiscally responsible while ensuring sufficient funding for our critical programs.