Higher Education Retirement | Kentuckians For The Commonwealth

Higher Education Retirement

House Bill Number: 

House Bill 358, as originally filed, would remove future university employees from the Kentucky Employees Retirement System (KERS) by allowing them to take their employees out of the pension plan through a buy-out and put them in a risky defined contribution plan.

A House committee substitute provides that postsecondary education institutions may voluntarily cease participation in KERS by paying the actuarial costs of ceasing participation. "Postsecondary institutions" are Eastern Kentucky University, Kentucky State University, Morehead State University, Murray State University, Northern Kentucky University, Western Kentucky University, the Kentucky Community Technical College System, and the Kentucky Higher Education Student Loan Corporation.

This bill harm employees’ retirement security, and also cause more underfunding of the plan by removing more employees from the KRS pool. Several university presidents have come out in support of the bill because it would allow them to get out from under increased pension payments. However, it is opposed by the Kentucky Public Pension Coalition.

Bill Sponsor(s): 
Rep. James Tipton + others

HB 358, as amended, passed the House, 76-21, on February 27 (see how House members voted).

A last-minute committee substitute, first made public on March 12 in the Senate State & Local Government Committee, significantly changed HB 358. It now freezes the pensions of all current employees at all quasi-governmental agencies such as rape crisis centers and health departments, resulting in a huge loss of benefits to their retirement income and likely a violation of the benefits promised at the beginning of their employment. Read more here: Pension Bill Breaks Inviolable Contract, Shifts Contributions from Underfunded Plan.

The Senate passed HB 358 as amended, 25-12, on March 13 (see how senators voted). On March 14 the House voted not to concur with the Senate changes. On March 28, the Senate voted not to withdraw its changes, a conference committee was appointed and reported back that it could not agree, a free conference a committee was appointed and delivered a new version of the bill which the Senate adopted 26-11 and the House adopted 58-39 (see how legislators voted).

The new version of the bill sets a course for the eventual disintegration of defined-benefit pensions for employees of universities and quasi-government agencies, like health departments. See: Breaking Inviolable Contract for Quasi-Governmental Employees Would Result in Massive Loss of Benefits.

On April 9, Gov. Bevin vetoed HB 358. He promised another special legislative session to deal with pension matters.

KFTC's Position: 
KFTC Opposes