Kentucky’s Supreme Court Voids Controversial Pension Bill

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Protesters amassed at the Kentucky State Capitol building earlier in 2018, after the controversial passage of a pension bill. (A still from "The Pension Gamble.")

December 13, 2018
by
Patrice Taddonio Digital Writer & Audience Development Strategist

In a 7-0 decision, the Kentucky Supreme Court on Dec. 13 voided a controversial pension reform bill, finding that its rushed passage earlier this year “was contradictory to the Kentucky Constitution.”

The bill, which was backed by the state’s governor, Matt Bevin (R), was intended to shore up Kentucky’s foundering public pension system, which is one of the most poorly funded in the nation. But as the October 2018 FRONTLINE documentary The Pension Gamble explored, its rushed passage — in which a scheduled vote on an 11-page sewer bill was suddenly replaced with a vote on an unrelated, nearly-300-page pension bill — sparked outrage, as did its possible impact on the state’s public school teachers in particular.

In a statement today, Bevin called the ruling an “unprecedented power grab by activist judges.” He added: “All options must remain on the table to solve this crisis because without real structural reform, the pension system is on the fast track to failure.”

Previously, Bevin-supported pension reform legislation had stalled in the face of opposition by Kentucky’s public school teachers, who feared what the proposed changes might mean for their promised financial security. In March 2018, with the legislative session drawing to a close, state Republicans tried a last-minute maneuver — one that took the debate over pensions into the sewer. Specifically, a newly-updated, nearly 300-page pension bill was slipped into the space on the legislative agenda once reserved for an 11-page sewer bill.

As this scene from The Pension Gamble recounts, members of the state legislature were brought into a committee room in the capitol building, given copies of the pension bill, and informed that a vote on it was just around the corner.

Democratic lawmakers, who hadn’t been given the chance to review the new bill before being told a vote was imminent, were incredulous — and angry: “I’m concerned first of all that what we’re doing is illegal,” Kentucky State Representative Jim Wayne (D) said.

But the vote proceeded.

“It was an unpleasant task I was asked to do. No one wants to make other people unhappy,” Kentucky State Representative Jerry Miller (R), the chairman of the Kentucky House State Government committee, told FRONTLINE in the film of bringing the bill to the floor for a vote that day. “But you have to consider all of the factors. We couldn’t pass a budget if we didn’t have a pension bill, and that is why I agreed, ‘We’ve got to get this bill back to the floor so we can have a debate, a full debate on it,’ knowing that the optics were terrible.”

“I’ve voted on plenty of bills I didn’t get to read, unfortunately. I had no choice,” Miller said as the surprise debate unfolded.

The Bevin-backed pension bill offered new teachers a 401(k)-style system rather than a guaranteed pension plan, a change that had been made to the pension system for the state’s police, firefighters, and thousands of other public servants several years earlier. It wouldn’t have impacted the pensions of current teachers.

But as The Pension Gamble explored, Kentucky’s teachers worry that when the time comes for them to retire, the state won’t have the money to pay their pensions. (The pensions of some other Kentucky state workers are facing insolvency in around three years.)

The bill’s passage sparked outrage and protests in the state — and ultimately found its way to the state Supreme Court. But it was only the latest development in the saga over Kentucky public employees’ pensions.

For more on the origins and details of the pension dilemma in Kentucky and across the U.S., watch The Pension Gamble in full. From producers Marcela Gaviria and Nick Verbitsky and correspondent Martin Smith, the documentary investigates the forces and choices that have driven America’s public pensions into a multi-trillion-dollar hole, and traces how state governments have shorted pension systems both by withholding pension contributions to cover shortfalls, and by waging risky bets on Wall Street.

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