Legislative Updates

Legislative Update 2-28-18.pdf


Senate Bill 1

Senate Bill 1 was filed February 20. Since then it has been reviewed and analyzed for what it does – and doesn’t do – to stakeholders. After a review of the provisions proposed, I don’t see any changes that affect current KRS retirees or their benefits.


On the other hand, there are a few that affect current employees:


  1. A new optional Tier IV 401(a) plan will be available – but, again, this is optional.

  2. An employee’s “High 3” or “High 5” will have to be three/five full years of service.  No more of having the month of July counting as a full year.

  3. Sick leave balances that can be used for service credit will be capped at amounts on record as of July 31.  After August 1, 2018, sick leave cannot be used to achieve retirement eligibility. Tier II cap remains at 12 months. Tier III participants do not have this, nor would Tier IV.

  4. Tier III (cash-hybrid participants) calculations have been changed resulting in less beneficial returns.

  5. Changed some of the rules for retired/re-employed requiring a break in service and differentiated this for non-hazardous and hazardous employees.

  6. Tier I employees hired after July 1, 2003 but before September 1, 2008 will be required to contribute the lesser of 3% of pay or the total normal cost of the benefit to help fund retiree health benefits.  (This is a big one.)

  7. The $5,000 death benefit will not apply to KRS participants hired after January 1, 2014.

  8. The Inviolable Contract provisions pertaining to all pension plans would be modified to state that the Legislature can change benefits for provisions that are put into place after July 1, 2018.

  9. Members in the Legislative and Judicial plans will not be moving into KRS as was once proposed but legislative plan retirees will have their benefits re-calculated on January 1, 2019 to be based on their legislative salaries only – no reciprocity for work in agencies covered by other systems.


There are considerable changes to the teachers’ plan and, unfortunately, I am not as well versed on these to really comment thoughtfully.

The methodology by which KRS employers pay the employer share is set out more specifically than before. “Level % of Payroll” is changed to “Level Dollar” and the amortization period is reset to 30 years. We’ll have to review changes in the budget bill to see what impact this has.

Conflict of interest statutes are also amended to include that no member of the General Assembly, public servant, trustee, or employee of KRS board shall have any interest in the business of KRS while employed/serving and for a period of 5 years following said employment/service.

The idea of CERS separation is not dead. The Public Pension Oversight Board is to create an advisory committee to evaluate CERS separation/restructuring of the systems administered by KRS and report recommendations no later than December 1, 2019.


We’ll let you know of what happens as this process moves along, most immediately on our Facebook page.  Hearings on SB 1 should start next week. We also have to keep an eye open for changes to the budget proposal in HB 200. Other partners in our Kentucky Public Pension Coalition have more grievous issues to try to get resolved. Frankly, the Senate is likely to pass SB 1 with minimal modification; the House maybe not so much. The last 25 or so days of this Session will be hectic.