Story by Ava Chuppe
Contributing Writer
am.chuppe@gmail.com
Gov. Matt Bevin signed House Bill 1, the emergency pension-relief bill, into law on July 24 at the State Capital in Frankfort, Kentucky.
The bill provides some relief to regional universities, including Murray State, by freezing employer contribution rates.
In 2018-19, Murray State’s pension cost was 49% but that jumped to 84% beginning July 1. HB1 ensures that Murray State will remain at the 49% for at least the next year.
Bevin called a special legislative session on Friday, July 19 to pass the pension bill.
Murray State President Bob Jackson testified in favor of the bill during the session, telling lawmakers that the current rates are not sustainable for universities with the decreasing state appropriations.
“It prevents an additional $4 million in pension costs this year,” Jackson said.
Ten years ago, Murray State was paying a 10% employer contribution rate into the Kentucky Employees Retirement System.
Bevin said this is a good day for the employees of the quasi-governmental organizations.
“If you’re an employee of one of these agencies, you should be pretty happy that those people that are responsible for not only the immediate agency but the men and women in this legislature responsible for ensuring the money is there are actually being honest with people, are funding it, and are coming up with a viable process where by we can ensure that in the future they will actually get what was promised to them,” Bevin said.
The bill will be retroactive, allowing organizations to remain at the 49% for the 2019-20 fiscal year effective July 1.
“This is one step in the journey,” Bevin said. “We aren’t even close. We have a $60 billion plus shortfall in our pension, unfunded liability. This is one step toward financial solvency.”
Leaders of the quasi-governmental agencies must decide over the next nine months which option presented in HB1 they will choose for their organization’s pension system moving forward. They can opt out of KERS and pay off their unfunded liabilities in one lump sum or over a 30-year period.
If they choose to exit KERS, the organizations can move their employees into a new 401k type plan.
Bevin said the legislature would make adjustments to the pension plan as needed until lawmakers are confident that everyone who was supposed to receive a pension will receive one.
The special session costs taxpayers $65,000 per day.