The Kentucky House of Representatives put forth a version of Senate Bill 2 last week that would add some footing to the sinking public pension deficit problem and help fund the pension.
The House’s public pension bill would require local government and state employers to make full payments of the actuarial required contribution beginning in fiscal year 2014. The estimated $100 million contribution would come from the general fund budget annually.
Brent Yonts, House State Government Chair D-Greenville, summarized the state’s funding problem last week and the need to fund it candidly on the floor.
“The solution is put the money in the pot,” Yonts said. “Put the money in the pot. We have failed to do that.”
Yonts said the answer for the estimated $300 billion deficit needed to be humane for the workers it affected and also prove a pragmatic funding solution for the state.
House Speaker Greg Stumbo, D-Prestonsburg, supported HB 416, a revenue generator, which passed 52-47 in the House last week to do just that.
HB 416 would generate an estimated $73.5 million in revenue by 2019. The bill would set up a pension trust fund in 2014 fueled mostly Kentucky Lottery games: iLottery, Club Keno and instant racing proceeds from Ellis Park and Kentucky Downs. Stumbo said the funding could take care of itself after about eight years and provide a long term funding answer for the public pension problem.
“If you don’t have the money, you can’t solve this problem,” Stumbo said on the House floor last week. “It’s as simple, ladies and gentlemen, as one, two, three.”
Stumbo said state funding for the Kentucky Educational Excellence Scholarship, which the state lottery funds, would remain protected.
The House’s version of SB 2 will remain the same benefit plan instead of the Senate’s shared risk plan, which allowed public employees to share in the risk of their investment portfolio despite a 4 percent guaranteed return. The House plan also includes a 1.5 percent cost of living increase for retirees if surplus funds are available. The new plan would allow the state to modify pensions and benefits for new hires in July 2013.