The measure, House Bill 1, the Pension Reform Act, cleared its final legislative hurdle on Friday morning when the Senate approved it on a 35-1 vote. The House had passed the measure 98-0 on Wednesday, according to the Associated Press.
“We are honoring our commitment to teachers, police officers, firefighters and other public employees by protecting their retirement benefits over the long term,” Beshear said during a bill signing ceremony inside the state Capitol in Frankfurt (see .
Legislative leaders who hammered out an agreement on the legislation over three weeks of private negotiations described the bill as a first step toward returning solvency to the state retirement system, which has a $26 billion unfunded liability. The reforms require future state employees to work longer before being eligible for retirement; to retire with full benefits, the sum of an employee’s age and years of employment would have to total 87. The plan would also require new employees to contribute 1% of their salaries to health insurance, according to the AP.
The proposed reforms would, among other things, put the state on a schedule to gradually increase its payments to the retirement system in hopes of eventually paying down the unfunded liability.
State Senator Tom Buford, R-Nicholasville, who cast the lone negative vote, called it “a little baby step.” He said funneling an additional $50 million a year into the pension system doesn’t do enough to shore it up.
Beshear called the General Assembly into a special session Monday after legislative leaders informed him they had tentatively agreed on a solvency plan for the system. To try to hold down the cost of the session, lawmakers rushed to meet a self-imposed Friday deadline for completing their work.
Beshear has set up a special panel to work on other long-term proposals for the legislature to address next year. That panel is studying such issues as whether the state should offer future employees a 401(k)-type retirement plan rather than the current pension configuration, according to the AP.
Provisions of the Pension Reform Act