by Tom Loftus, Louisville Courier Journal –
STORY HIGHLIGHTS
- New teachers will continue to be placed in the state’s traditional pension system.
- Teachers will continue to be able to use accrued sick days when determining their pension benefits.
- Educators can retire with full benefits at 60.
FRANKFORT – In a rebuke of the General Assembly and blow to Gov. Matt Bevin’s approach to reforming Kentucky’s pension system, the Kentucky Supreme Court on Thursday unanimously struck down the pension reform law passed by the 2018 General Assembly.
The high court ruled that the speedy process used by Republican majorities that turned Senate Bill 151 from a sewer bill into a 291-page pension reform bill and zip it into law violated a provision within the Kentucky Constitution intended to assure that lawmakers have the “fair opportunity” to consider a bill before voting on it.
“We declare the enactment of SB 151 was contradictory to the Kentucky Constitution and is hereby void and of no effect,” Justice Daniel J. Venters wrote for the court.
The Thursday decision upholds a ruling in June by Franklin Circuit Judge Phillip Shepherd who struck down the law. And, like Shepherd, the high court struck the law down only because of a flawed process – not the rule on the legality of how the contents of the bill would have changed pension benefits.
The high court ruling is a big victory for the teacher’s unions, advocacy groups for retirees and Democratic Attorney General Andy Beshear, who filed the lawsuit challenging the law saying the process was flawed and and the contents of the bill broke legal promises to public employees.
And it leaves Bevin with nothing to show for the priority push of his term as governor — to pass a law that would help control debts within Kentucky’s public retirement systems, officially booked at nearly $43 billion.
“This is a sad day for Kentucky,” Bevin said at a press conference Thursday afternoon. “It’s a sad day for anybody who hopes to retire after years of government employ. It’s a sad day for the rule of law. It’s just a sad day.”
But Beshear called the ruling “a landmark win for every teacher, police officer, firefighter, social worker, EMS and all our hardworking public servants. It fully and finally voids the illegal cuts to their retirement and clearly states that the governor and General Assembly violated the Constitution.”
The ruling is likely to have significant political ramifications. Bevin has said he will seek re-election as governor next year. Beshear has announced he will run for governor in 2019 as has longtime state legislative leader Democrat Rocky Adkins, also a leading critic of the pension law.
More immediately, the ruling could re-energize teachers and other opponents of the law who held mass demonstrations against pension proposals last winter.
The new law would not have made deep cuts in benefits for Kentucky teachers or government employees like an earlier proposal by Bevin and a bill considered early in the 2018 legislative session.
Its major provision would have placed future new teachers in a “hybrid cash balance” savings plan much like a 401(k) plan, rather than putting them in the traditional pension plan with defined benefits. Opponents say this would be a huge blow to the ability of public schools to recruit and retain talented young people to their profession.
Immediately after Bevin signed the bill into law in April, Beshear filed suit, joined by the Kentucky Education Association and the Kentucky State Lodge of the Fraternal Order of Police.
Beshear, who argued the case in the trial court and before the Supreme Court, said several benefit changes that remained within the law violated what is known as an “inviolable contract” within state law that protects pension benefits given to a public employee at the time the employee was hired.
Andy Beshear reacts to the Kentucky Supreme Court pension reform ruling. Matt Stone, Louisville Courier Journal
Beshear also said the rapid process used to pass the bill violated a requirement in the Kentucky constitution that all bills be given three readings on separate days in each chamber before they can become law.
Steve Pitt, Bevin’s general counsel, disagreed. He said modest changes in benefits in the law break no promises to public employees and that moving future teachers into the cash balance plan is vital to the future solvency of the Teachers’ Retirement System.
Pitt said lawmakers knew what they were voting on because provisions of the final bill were in an earlier pension bill. He said the courts cannot dictate procedures adopted by the legislative branch, and warned that myriad laws already on the books were passed in a similar process and will face legal challenges if the pension law is struck down for procedural reasons.
But Thursday’s opinion strongly rejected these arguments. It said that the case was not about the legislature’s procedures, but about a provision in the state constitution intended to assure that lawmakers have time to consider bills before a vote.
“The Court’s power, indeed its duty, to declare the meaning of constitutional provisions is a primary function of the judicial branch in the scheme of checks and balances that has protected freedom and liberty in this country and in this Commonwealth for more than two centuries,” the ruling said.
Bevin initially proposed a much broader reform bill in October 2017 that would have made significant cuts in benefits for teachers and other public employees. But while top Republican legislative leaders initially embraced that plan, strong opposition to the proposal caused rank-and-file Republicans to back away from it. Matt Bevin, Andy Beshear and others react in Frankfort to pension ruling.
Lack of Republican support, particularly in the House, caused Bevin to put aside his promise to pass the proposal at a special session late last year. And when the regular session began in January, Republican legislative leaders struggled to find the votes for some compromise bill.
And a bill that finally was introduced stalled in the Senate as thousands of teachers and other opponents demonstrated in the hallways outside.
As the session was drawing to a close on March 29, a scaled-down version of pension reform was revealed at a hastily called meeting of the House State Government Committee. That committee stripped the contents of Senate Bill 151 – a bill dealing with “local provision of wastewater services” that had nearly completed its course through the legislative process – and replaced it with the new pension reform bill.
Despite the cries of Democrats who said they had no time to read the new bill, Republican majorities rammed it through the final steps of legislative process in a few hours and sent it to Bevin.
Bevin said Thursday that the new law would have been only a Band-Aid. But he has said it was an important step because it would have reduced future risk to taxpayers and provided a new way of funding the pension plans that would lead to a quicker recovery.
The governor stressed Thursday that his attempt to push the bill to reform the system has come along side his successful efforts to convince lawmakers to – for the first time in years – fully fund pensions with hundreds of millions of additional dollars.
This story will be updated.
Tom Loftus: [email protected]; Twitter: @TomLoftus_CJ. Support strong local journalism by subscribing today: courier-journal.com/toml.
