Higdon: Senate reform bill preserves state pensions without shift to 401(k) plans

14th District state Sen. Jimmy Higdon welcomed Danny Waits to the Senate on February 13. (Photo: LRC-PI)

By JIMMY HIDGON
14th District State Senator

Friday, Jan. 22, 2018 — After weeks of anticipation and months of discussions and meetings with stakeholders, the Kentucky Senate Majority Caucus filed its comprehensive pension reform bill as Senate Bill (SB) 1 on Tuesday, February 20. While SB 1 marked the filing of one of the most significant pieces of legislation of the 2018 Session, we continued to hold committee meetings and voted bills out of the Senate chamber, making for another busy week in Frankfort.

SEN. JIMMY HIGDON

In SB 1, our goal was to balance the harsh reality of the fiscal health of the retirement systems with the expectations of current public employees, teachers, and retirees. We worked to do just that while respecting the taxpayers of the Commonwealth. Senate Bill 1 is a data-driven plan that reflects hard work, numerous revisions, and most importantly, input from teachers and public employees. We listened to your feedback and this plan reflects that by addressing many issues raised in the previous proposal.

This plan does not place any future state employees into a defined contribution, or a 401(k)-style, retirement plan, and it will not force any current or future state employees into a 401(k) plan.

This proposal solves Kentucky’s $40 billion unfunded pension problem by changing how state government funds pensions. Kentucky will convert to a “level dollar funding formula” which means the unfunded liability will be completely paid off within thirty years by making a large payment each year—just like paying off your home mortgage. Under this funding plan, the retirement systems will receive hundreds of millions more in funding each year, going above and beyond the minimum payment to more quickly pay down the debt. I look forward to continuing the pension discussion as the bill moves through the legislative process.

One of the first pieces of legislation we passed this week was Senate Resolution 149, which recognizes the role the hospitality industry can play in disrupting child sex trafficking and encouraging residents, employees, and agencies to use hotels and venues which are signatories of the Tourism Child-Protection Code of Conduct, known as The Code. The Code is a voluntary multi-stakeholder initiative with the mission to provide awareness, tools, and support to the tourism industry to prevent the sexual exploitation of children.

We also passed a number of other bills in the Senate this week: Senate Bill 119 lays out the legal carcass disposal methods for cervid (deer) meat processors; Senate Bill 149 and SB 126 are both reorganization bills for the Cabinet for Health and Family Services; Senate Bill 109 updates the statutory definition of rape; and House Bill 74 aims to deter the resale of stolen goods to pawnbrokers by making the pawnbrokers’ registers more transparent and requiring secondhand merchandise sold to a pawnbroker to be held a minimum of 12 days before being resold.

The budget is still in the hands of the House of Representatives, but we expect to receive it in the Senate in the coming weeks. We have already begun an intensive review process, and once it is in our possession, we will continue that process while making our own changes. It is a lengthy and strenuous process, but I am confident that the final product will be fiscally responsible while ensuring sufficient funding for our critical programs.

Last but certainly not least, I want to acknowledge a very special constituent. I was able to hear Danny Waits’ speech on January 31 at a rally supporting Kentuckians with disabilities. During his speech he told his personal story of losing both his parents at a young age, and how his guardian had put him in contact with Communicare Inc. Through the aid given by Communicare, Danny was able to receive employment at Nelson County Industries and eventually Best Buy. The determination shown by Danny has truly impressed me and my fellow senators as he has been able to provide for himself with his job and work ethic.

I was impressed to hear that as of last year Danny was able to purchase his own home and his own healthcare because of his hard work. I, and the rest of the Senate, commend Danny on his accomplishments as well as the work of the Kentucky’s mental health and disabilities advocates and the community of health care providers.

If you have any questions or comments about these issues or any other public policy issue, please call me toll-free at 1-800-372-7181, on my home phone at 270-692-6945, or email me at Jimmy.Higdon@LRC.ky.gov. You can also review the Legislature’s work online at www.lrc.ky.gov.

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