Daily Independent (Ashland, KY)

January 30, 2013

Not all happy with pension reform meeting

CNHI News Service

FRANKFORT — Republican state Senate leaders said Wednesday they expect to pass a pension reform bill that mirrors the recommendations of a task force that calls for lawmakers to fully fund the system and ask future employees to share some investment risk.

The statements of Senate President Robert Stivers, R-Manchester, and Majority Leader Damon Thayer, R-Georgetown, who co-chaired the task force and will sponsor the legislation, followed a two-hour “informational meeting” with Senate Democrats behind closed doors.

But a coalition of public employee groups complained they should have been invited to the meeting to share their concerns and suggestions.

Stivers said the meeting was to educate Senate members about the recommendations and allow them a comfortable setting to ask questions. David Draine, of the PEW Center on the States which helped the task force craft the recommendations, reviewed those proposals for the senators.

A conservative think tank, the Bluegrass Institute for Public Policy Solutions, which generally supports pension reform, also criticized the closed meeting.

“The truth is that everything that was discussed has been discussed in public forums over the course of the public pension task force,” Thayer said. “I don’t really understand what all the wailing and gnashing of teeth is all about when we really should be focusing on solving a problem.”

Republican Caucus Chairman Dan Seum, R-Louisville, said the meeting “plowed new ground here” by convening a “very comfortable meeting” between Republican and Democratic senators on a controversial and important issue. Stivers has said he wants a more cooperative relationship with Democrats, the House and Gov. Steve Beshear than existed under his predecessor David Williams.

Thayer will sponsor a bill reflecting the recommendations of the task force and a vote could take place in the Senate at the end of the first week or early in the second week after lawmakers return on Tuesday, Feb. 5.

He and Stivers said they think the measure has enough support to pass the Senate. They, along with Seum, said some Republicans might actually want to “go farther” than the task force recommendations but those recommendations reflect a bi-partisan approach that can pass.

Senate Minority Leader R.J. Palmer, D-Winchester, said 11 of the 14 Senate Democrats attended the meeting and later said the statements by the Republican leaders accurately reflected what occurred.

“I think that it does have the votes,” Palmer said, including general support of Democrats.

The task force recommended that legislature immediately begin making full contributions to the system in the 2014-15 biennial budget — about $327 million in new funding in the first year; to end cost of living adjustments, although the legislature could in the future re-instate them if it provides funding for the COLA up front; to move new hires to a hybrid, cash-balance plan in which employees would pay more toward their retirement but which would still guarantee a minimum 4 percent return.

Any investment return above 4 percent would accrue to the plan to cover years when the market return fell below 4 percent. Employees could “cash out” upon retirement, taking the balance to a new job or retirement plan or buying an annuity to pay them an annual return.

Public employees have long called for lawmakers to fully fund the system, noting lawmakers for many years underfunded it to free up money for other services or projects. But they object to many of the other changes.

The Kentucky Public Pension Coalition, made up 19 groups from AARP, KEA retirees, AFL-CIO, and various employee representatives, held its own meeting after the senate session.

They heard testimony from three analysts who criticized several of the proposals such as the hybrid-cash balance plan and ending of COLAs.

Diane Oakley, Executive Director of the National Institute on Retirement Security, said the proposed fix wouldn’t provide any more surety that future legislatures would fully fund the state commitment than the present system while at the same time requiring higher contributions from employees.

She also said a defined contribution plan, even a hybrid plan like the one proposed, would not be as attractive to prospective state employees.

Steve Barger, spokesperson and coordinator for the group, said employees agree on the need for full funding of the system but want to participate in crafting an overall solution.

“We would like to have the opportunity to meet with senators and the House and the administration and try to help reach a solution,” Barger said. “We just want to be at the table.”

Barger said he expects employee groups will be invited to testify at committee hearings on the bill.

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.