Published: June 09, 2008 06:03 pm      

Lawmakers close on pension deal, special session

FRANKFORT — State lawmakers meeting on pension reform have come up with a “very detailed recommendation” which is likely to produce an agreement Tuesday for a special session before the end of the month.

That was the word from Senate President David Williams, R-Burkesville, and House Speaker Jody Richards, D-Bowling Green, when the lawmakers emerged from an all-day meeting.

Williams said the group came up “with a recommendation that should be acceptable to everyone in the legislature,” but it does not solve some of the more difficult long-term issues concerning benefit structure for future employees.

“It falls far short of what the Senate has done in two sessions,” Williams said, “but it may very well be the best we can get. It goes as far as they (the House) would go.”

The employee pension funds face an unfunded liability of about $26 billion and are burdened by rising health care costs for retirees. Some actuarial studies indicate the system could go broke in as little as five years – meaning there are only two more budget cycles left for lawmakers to deal with the problem.

Twice, the Senate has passed reform legislation with bi-partisan support – first by issuing bonds to shore up the funds while requiring future employees to contribute to their own retirement funds, and this past year, by increasing the age of retirement while requiring future employees to contribute 1 percent to their insurance coverage and studying changes to benefits for future hires.

The House rejected the first proposal, in 2007, outright and passed its own bill this year without addressing future hires. Each time reform measures died because they could not pass both chambers. Last month, Gov. Steve Beshear said he would call a special session to deal with the issue – if lawmakers could agree in advance on a bill. He proposed a bill which combines features from both the House and Senate bills on which both chambers agree.

But it puts off several long-term issues, including benefit changes for future hires.

“We’ve gone a little bit farther than what the governor earlier proposed,” Richards said. He and Williams declined to provide any specifics, but each seemed to hint future benefits might be addressed. But that won’t include a defined contribution plan, in which employees are responsible for contributing at least a portion of their retirement, according to Rep. Mike Cherry, D-Princeton.

Richards said the group made “some tentative agreements and we want to take that to as many members as possible. And we’d like to see it in writing.”

“But hopefully, by 11:30 (Tuesday) we will be able to talk about some specifics,” Richards said. He said if the group agrees they have a deal on Tuesday, they will contact Beshear who is traveling in Japan on an economic development trip so he can issue a call for a special session.

Both Richards and Williams characterized the meetings as “productive” and “cordial.” But Williams said, “Anytime you have a compromise there will be some people who will be displeased.”

He said the agreement still leaves the legislature “with some big issues to address in the future. We have to continue to make strides and have people step up and say what kind of benefit package future employees will have.” Otherwise, he said, the state can’t sustain the retirement programs without high taxes or severely cutting back on critical government services.

The group began meeting Monday morning and didn’t break for lunch until around 1:45 p.m. At that time, several lawmakers indicated they were making progress and an agreement might be close.

“That’s a relative term,” said Senate Pro Tem Katie Stine, R-Southgate, when asked if they were close to an agreement. “But everybody seems to want to do this right.”

Senate Minority Leader Ed Worley, D-Richmond, said the group had a fruitful discussion.

“We’ve been talking about every single point and vetting it out,” Worley said.

“It is a step forward,” said Williams.

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com.