All set to start: After much anticipation, Governor Bevin has called the legislature to convene for an “extraordinary session” tomorrow – Friday, June 19, 2019.

How did we get here: The announcement of a special session has been looming since Governor vetoed HB358. Because the bill passed after the veto break by the House and Senate on the very last day of 2019 Ky Regular Session, it was not eligible for veto override. In his veto letter, the Governor said he felt the final bill was unconstitutional and stated his intention to call a special session to find a solution. Recall that the Kentucky Supreme Court found a 2018 pension bill unconstitutional due to process considerations.

What’s this about: The issue on the table is pension reform, specifically a fund that impacts regional universities, health departments and other “quasi-governmental entities.” This year, employer obligations will rise from 49 cents to 84 cents for every dollar of compensation. As you might imagine, opinions on the topic vary dramatically. Because many entities cannot afford or sustain this increase, many would like to see current rates frozen for a year, then consider options. Some want systemic changes before allowing an opt-out. Others, like the Kentucky Center for Economic Policy, worry that any transition option will lead to cuts for current and future retirees. Still others argue that additional sources of revenue are the solution and worry that the legislature and executive branches have not fully explored alternatives. Regional university presidents, however, have submitted a letter in support of the Governor’s proposal, as have leaders of top “quasi” groups. Democratic leaders reacted to the bill with a letter detailing concerns about the measure’s financial impact and legality, and have proposed their own fix in the form of two bills.

Who’s impacted: Again, this is for KRS pension fund, impacting over 100 “quasi-governmental entities” which amounts to roughly one-quarter of the KERS non-hazardous employee pool. Here’s a list of some that will be impacted:

Regional Universities (7) Eastern Kentucky University, Western Kentucky University, Murray State University, Morehead State University, Northern Kentucky University, and Kentucky State University, plus KCTCS

“Non-P1 State Agencies” (37) including sexual assault & rape crisis centers, child advocacy groups, Kentucky Educational Television (KET) Foundation, and Council of State Governments (CSG) Headquarters 

Local Health Departments (61)

Regional Mental Health Units (13)

How long will this take: It’s the Governor’s constitutional power to call a special session and decide when it begins; legislative leadership gets to control the pace. A minimum of five days is required to pass a law. However, it may take longer. This session will very likely be Friday, Saturday, Monday, Tuesday, and Wednesday. The legislature can meet on Saturdays, but not on Sundays, and the days do not have to be consecutive. Important to note are the universities and others impacted who said they needed answers no later than June 1, as pension costs have a major effect on fiscal year planning. As of July 1, most if not all have put contingency budgets in place with hopes that the special session would occur. 

What’s in this bill: The Governor’s bill freezes the current rates for one year and provides a timetable for quasi agencies to remain in the system or exit. Deadlines and stipulations for opt-out are detailed in the bill. Those deadlines are such that the 2020 General Assembly has time to revisit the issue and make additional changes before any employer opts out. This means the Legislature could choose to confront major aspects of the pension again next year. Action is not guaranteed. This is definitely in flux. You can find the bill text here: 

Pension Bill Draft

What’s going to happen: We will continue with updates as action happens. The Administration has said that a majority of the House and Senate have confirmed “Yes” votes for the bill that will be advanced.