Pension reform still possible?

Governor Beshear had a meeting with leaders of the legislature this morning about pension reform. There is a move afoot to have a special session to get this done.

I certainly hope this happens. We are well past the time to make some changes on this topic. My only complaint is that it may not go far enough. The proposal includes more study of the already most studied issue in Frankfort. But, progress is progress. Below is the release from the Governor:

Gov. Beshear Proposes Pension Reform Measures – Will Save $500 Million Annually in Pension Costs and at Least $50 Million in Immediate Savings to City and County Governments and School Districts

Proposes Special Session Last Week of June; Creates Working Group to Address Remaining Issues

FRANKFORT, Ky. (May 29, 2008)—Gov. Steve Beshear today called on legislators to agree on major pension reform issues in the next three weeks which will save taxpayers $500 million annually and city and county governments and school districts at least $50 million immediately. If such an agreement can be reached, the Governor said he would call a special legislative session to enact the reforms before June 30, the end of the current fiscal year.

“Democrats and Republicans, public employees and public employers, we all agree that the state’s public pension problem is a real mess,” said Gov. Beshear. “And, we all agree that the failure to pass meaningful pension reform during the last legislative session has made the problem worse. And, most significantly, we all agree that we must act now to stop the bleeding of taxpayer dollars.”

During the last session, the House and Senate passed separate bills, many provisions of which were strikingly similar. Key issues that remain in dispute are governance of the systems and consideration of new models for future benefits, issues that have not been fully vetted and did not receive any recommendation from former Governor Fletcher’s Blue Ribbon Commission.

Gov. Beshear’s staff compiled all of the provisions of the two pension bills from the 2008 session that used the same language or shared principles.

“The draft language represents issues where there is substantial agreement between both Houses,” said the Governor. “In addition, this draft contains the recommendations of Governor Fletcher’s Blue Ribbon Commission.

Those recommendations include:
Raising retirement ages for future hires;
Lowering the cost of living adjustment to 1.5 percent;
Requiring new employees to contribute 1 percent of their salary to the health insurance fund; and
Reforming the practice of double-dipping.

Gov. Beshear met with House and Senate leaders this morning to provide the draft language and urged them to reach agreement on these core components in the next three weeks. If they agree, he will call a special session the week of June 23 to take up this compromise bill.

“Agreement on these reforms will result in savings of nearly $500 million annually to state and local government obligations to fund the pension system,” said Gov. Beshear. “It will also provide city and county governments and school districts with at least $50 million in immediate savings starting July 1.”

Gov. Beshear also emphasized that the state will realize a record number of retirees this year, and a failure to reform the practice of “double dipping” could impose significant additional costs on the state.

“It’s time to set aside issues that divide us, to identify all of the significant things we agree on, and work together to come up with a partial, but substantial solution to the pension mess we are in,” said Gov. Beshear. “We all agree there is a problem. We agree the problem is getting worse. We agree the time is now. And we agree on the basic changes that need to be made. Let’s get it done, now.”

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