FRANKFORT — Public-pension reform moved closer to some sort of resolution in the House this week as the chamber approved its version of a pension overhaul bill, along with a separate bill that a majority of members say will generate necessary revenues to fund the system.
Both pieces of legislation were approved largely along party lines Wednesday. The pension reform bill, Senate Bill 2, passed by a vote of 55-45 and the revenue bill, House Bill 416, cleared the body by a vote of 52-47. Some voting against the legislation in voiced concerns with the procedural handling of the two bills while supporters of both the committee substitute to SB 2 and HB 416 assured members that both bills were in order. That opinion prevailed.
Like the Senate proposal, the House version of SB 2 would require the state or local government employer to fully fund the actuarial required contribution (ARC) to whichever of the six Kentucky Retirement Systems’ pension plans serves their workers. But instead of doing away with automatic retiree cost-of-living raises (or COLAs), the House version would allow retirees to receive 1.5 percent raises if they are properly authorized and pre-funded by the General Assembly.
The House also voted to keep the current defined-benefit retirement structure for future hires instead of switching them over to a hybrid cash-balance plan as proposed by the Senate—although the General Assembly could modify benefit factors, contribution rates, and eligibility rules for future workers, which it cannot do to current retirees and members due to an “inviolable contract” provision in state law.
Full funding of the ARC—which actuaries say will help the state pay down an estimated $30 billion in unfunded pension liability over the next three decades—is estimated to cost the state around $100 million per year beginning in the next state budget cycle. That leads us to HB 416 which, unlike the original Senate proposal in SB 2, addresses funding for the reformed systems.
As it stands right now, HB 416 would help pay the state General Fund’s $100 million annual ARC payment through proceeds from potential expansion of Kentucky Lottery game offerings and a portion of the proceeds from wagers on previously-run horse races (known as instant or “historic” racing). The state’s take is expected to total around $74 million by 2019 and more in subsequent years, proponents of HB 416 say, adding that use of lottery money from expanded new offerings like Keno and iLottery would not affect dedicated lottery funding of scholarships through the KEES (Kentucky Educational Excellence Scholarship) program.
Before the House floor vote on HB 416, members were told that passage of a revenue bill to help fund pension reforms laid out in SB 2 is necessary to avoid a special legislative session later this year. And, constitutionally, all revenue bills must originate in the House, not the Senate. But concerns about both bills--especially their handling procedurally--lingered after the House vote on both measures.
Some members expressed concerns about whether a proper fiscal impact analysis had been performed on the House version of SB 2; others expressed doubt on whether or not HB 416 actually received a Constitutional passing vote in the House. (In odd-year legislative sessions, bills raising or appropriating revenue must receive a 3/5 vote in both chambers, or 60 votes in the House and 23 in the Senate). The bill only cleared the House chamber by a margin of 52-47, eight votes short of 60. But House leaders, citing a court ruling, said the supermajority requirement only applies to the final bill passed by both chambers, not to bills that are works-in-progress still winding their way through the process.
What have been called “unintended consequences” of the so-called “pill mill bill”, or HB 1, passed during the 2012 special legislative session were also addressed this week with House passage of HB 217.
Clearing the House unanimously, HB 217 would alleviate some regulatory burdens of the mandatory controlled substance reporting law on providers and patients. Mandatory reporting to KASPER (Kentucky All-Schedule Prescription Electronic Reporting system) would be lifted for hospitals and long-term care facilities, which typically provide one or two doses or “unit” dosing at set times, and exemptions would be made for post-surgery patients, end-of-life patients, and some other patients who may need increased pain management. HB 217 now goes to the Senate for its consideration.
A bill that would set new safety requirements for Kentucky public schools to prevent tragedies like the December school shooting that left 20 children and six school workers dead in Newtown, CT, has also passed the House and gone to the Senate.
HB 354 is largely based on the work of the House Subcommittee on School Safety formed earlier this year. It would codify several new school safety requirements, including adoption of school emergency plans for disasters and lockdowns, additional emergency drills, access to school floor and emergency plans by first responders, and visible numbering of windows, door and hallways in each school. Proponents of HB 354 called it “a start” in addressing the safety needs of our schools, and the House passed it 96-0.
Other notable bills that passed the House this week and were sent to the Senate for consideration are:
Ø HB 112, which passed the House 95-0 this week. This measure would create an employers’ organ and bone marrow donation tax credit for employers who give a paid leave of absence to workers who are Kentucky residents and who make an organ or bone marrow donation. The tax credit—which would equal the employee’s compensation, cost of temporary help in the person’s absence, and any other allowable expenses—would be offered starting with the 2014 tax year and have a three year carry-forward period.
Ø HB 98, which cleared the House 84-10 this week, would allow a local school board to adopt a policy related to teen dating violence. The bill would require middle and high school professional staff to complete at least one hour of self-study about teen dating violence, with materials developed by the state Center for School Safety. It would additionally require that all incidents of teen dating violence be recorded statewide.
With only eight legislative days remaining in the 2013 Regular Session, the chance for bills to be enacted into law during this short session is narrowing. You can stay informed of daily legislative action on bills of interest to you a few ways: Log onto the Legislative Research Commission website at www.lrc.ky.gov; Call the LRC toll-free Bill Status Line at 866-840-2835; Find committee meeting schedules online, or call the LRC toll-free Meeting Information Line at 800-633-9650. To comment on a bill, please call the toll-free Legislative Message Line at 800-372-7181.