Vetoed by Governor Matt Bevin

Vote Smart's Synopsis:

Vote to adopt a conference report that authorizes pension relief for local health departments, regional universities and other groups.

Highlights:

• Defines “active member” as a member who participates in the Kentucky Employees Retirement System and is employed by a quasi-government employer, except for those members who are participating in the Kentucky Employees Retirement System under hazardous duty coverage (Sec. 1).

• Defines “quasi-governmental employer” or “employer” as the following (Sec. 1):

• Eastern Kentucky University, Northern Kentucky University, Western Kentucky University, and Kentucky State University;

• Morehead State University, and Murray State University;

• The Kentucky Community Technical College System;

• The Kentucky Higher Education Student Loan Corporation;

• State-administered retirement systems;

• Local and district health departments;

• Mental health boards, Domestic violence shelters, and Rape crisis centers;

• Child advocacy centers; and

• Any other agency eligible to voluntarily cease participating in the Kentucky Employees Retirement System.

• Requires any quasi-governmental employer participating in the Kentucky Employees Retirement System to cease participating in the system for its non hazardous employees subject to the requirements and restrictions of this bill (Sec. 1).

• Authorizes a quasi-governmental employer to adopt a resolution to continue participation in the system and submit the resolution to the board by December 31, 2019 (Sec. 1).

• Requires the quasi-governmental employer, if they’ve chosen to adopt a resolution to continue participation in the system and submits the resolution to the board, to pay the full actuarially required contributions in all future fiscal years occurring on or after July 1, 2020 (Sec. 1).

• Requires, if a quasi-governmental employer ceases participation in the Kentucky Employees Retirement System, the quasi-governmental employer to provide an alternative retirement program for employees who will no longer be covered by the system, which (Sec. 1):

• Will include a qualified trust or eligible retirement plan and provided a fixed employee contribution rate for each pay period that is equal to the system’s employee contribution rate to the pension fund for those employees participating in the system prior to the employer’s effective cessation date; and

• Won’t include a defined benefit plan which can’t have an unfunded liability.

• Requires the quasi-governmental employer to pay the full actuarial cost of the benefits accrued by its current and former employees in the system through the effective cessation date, the present value of future normal costs of additional service services accrued by employees making an election and for interest and adjustments to the cost in the case of ceasing employers making installment payments (Sec. 1).

• Specifies that full actuarial cost (Sec. 1):

• To be determined separately for the pension fund and the insurance fund by the actuarial study;

• To be paid by lump-sum payment or in installment payments to the system;

• For the ceasing employer to include all service for any active member, inactive member, or retired member whose last participating employer was the ceasing employer; and

• To be fixed, and the quasi-governmental employer will not be subject to any increases or subsequent adjustments, once the lump sum is paid or the first installment payment is made.

• Prohibits any non hazardous employee hired on or after January 1, 2019, regardless of their of when they became a member of the system administered by the Kentucky Retirement Systems, to be eligible to participate in the Kentucky Employees Retirement System through the quasi-governmental employer that ceased participation for the rest of their employment with the quasi-governmental employer (Sec. 1).

• Requires any non hazardous employee who began participating in the system on or after January 1, 2014 and before January 1, 2019, who is participating in the hybrid cash balance plan, to accrue benefits through the employer’s effective cessation date but will not accrue any additional benefits in the Kentucky Employees Retirement System (Sec. 1).

• Authorizes any non hazardous employee who began participating in the in the system prior to January 1, 2014 and before January 1, 2019, to, on or before the employer’s effective cessation date, make a one time irrevocable election to continue making employee contributions and accruing benefits in the system after the employer’s effective cessation date for the durations of their employment with the ceasing employer (Sec. 1).

• Requires, on the first day of the month following the effective cessation date, an employee who will cease participation in the system to be considered an inactive member with respect to his or her employment with the employer that ceased participation and will (Sec. 1):

• Retain their accounts with the Kentucky Employees Retirement System and have those accounts credited with interest;

• Contribute to the alternative retirement program;

• Retain their vested rights;

• If the alternative retirement plan is a qualified trust or eligible retirement plan and is capable of accepting trustee-to-trustee transfers of both before-tax and after-tax contributions, be eligible to seek to transfer their accumulated account balance to the employer’s qualified alternative retirement program within 60 days of the employer’s effective cessation date, unless the employee is prohibited due to an election to continue participating in the system; and

• Be eligible to take a refund of their accumulated account balance.

Full Bill Text