A Legislative Perspective on the Kentucky General Assembly with State Representative Rick Rand June 25, 2018

FRANKFORT – For those of us who opposed this year’s public-pension bill, the court ruling that struck it down last Wednesday was cause for celebration.  It also re-affirmed something even more important: The people of Kentucky should never be shut out of the legislative process.

Franklin Circuit Court Judge Phillip Shepherd’s opinion is just the latest – but not the last – step in a saga that has been going on for more than a year.  The Kentucky Supreme Court will ultimately decide the law’s fate in the weeks ahead.

Those who claim the public-pension bill is necessary to “save” the two main public retirement systems are wrong.  On the contrary, this legislation would cost taxpayers about $5 billion extra over the next 30 years by essentially re-financing the systems’ long-term liabilities.

While all of us are paying more, many current teachers and public workers would see less in retirement, and new teachers hired in 2019 and beyond would be saddled with retirement benefits substantially inferior to what their predecessors have received since 1940.  That would make it even tougher to lure qualified educators to the field.

In short, this law is a misguided approach that ignores previous bipartisan reforms approved by the General Assembly.  That work began 15 years ago and culminated with far-reaching changes in 2013 and major funding increases in the 2014, 2016 and 2018 budget cycles.

This additional money has enabled the public retirement systems to focus more on long-term investments without having to sell assets to cover their monthly costs.  As a result, their most recent investment returns were about double what they aim for each year.

As long as state and local governments maintain these payments, we’ll see the systems’ liabilities continue to decline, much like a mortgage on a home.  Although I don’t want to downplay the seriousness of this issue, I do want to note that the systems have $30.1 billion on hand to cover retirement checks totaling about $3.9 billion a year.

Judge Shepherd’s ruling last week did not focus on these policy decisions; instead, he struck down the law because of the process used to enact it.  Essentially, he said Kentucky’s constitution bars the General Assembly from passing a major bill just hours after being presented without giving the public a chance to comment.  It wasn’t even available online until it was already on the governor’s desk for his signature.

The ruling also says bills like this that appropriate tax dollars must have the support of a majority of those elected to the House and Senate.  In this case, the bill passed the House two votes shy of the 51 that the judge says is necessary.

Many may wonder what will happen if the Supreme Court upholds this ruling.  The short answer is nothing.  We will return to the reforms that maintain wide support and have proven their effectiveness; the retirement systems – and their retirees – will continue to receive what they are owed; and current and future teachers and public employees will not be unfairly burdened.

There is another bright side to this ruling: It will better ensure the legislative process is more transparent going forward.  Hopefully, this will mark a return to the bipartisan work we’ve seen over the years, and even saw during this year, when both parties came together to improve and streamline the laws governing foster care and adoption.

Kentucky’s own Louis Brandeis, who began serving on the U.S. Supreme Court a little more than a century ago, was right when said sunlight is the “best of disinfectants.”  If a bill cannot stand up on its own merits in the light of day, it certainly does not deserve to be passed under the cover of night, as this public-pension bill was.  The people of Kentucky deserve better than that.

Should you have questions or concerns about this issue, or any other affecting the state, don’t hesitate to contact me.  My email is Rick.Rand@lrc.ky.gov, and if you’d like to leave a message for me or for any or all legislators, the toll-free number is 800-372-7181. For those with a hearing impairment, the number is 800-896-0305.

Paid for by Rick Rand for State Representative, Regina Rand, Treasurer