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State Supreme Court Strikes Down Kentucky Pension Bills

By a unanimous 7-0 vote, the Kentucky Supreme Court struck down Senate Bill 151, which reformed the state pension system, and was derided as "the sewer bill" because of its attachment to other, unrelated legislation.

Read the full opinion here.

The Supreme Court decided that the bill's language changed but the title, "wastewater bill", remained the same. For its third reading in the state Senate, the title was read with the text of a pension bill, though in its first two readings, the title and original wastewater legislation text was used. 

Only after the vote was the title changed to reflect the pension legislation.

In the state House, the bill received two readings as wastewater legislation, and then a third with a wastewater title and pension-related text.

The Supreme Court concluded that neither chamber of the Kentucky General Assembly read the bill aloud by its title as an act relating to retirement and public pensions.

The justices noted that when reading the bill officially by title only, without corresponding related text, the entire process would need to start over with three separate readings on different days.

Republican Governor Matt Bevin and GOP lawmakers argued that an overhaul of the state pension system was necessary to eliminate the state's $37.9 billion pension shortfall. 

The legislation was challenged in court by Democratic Attorney General Andy Beshear and other groups.

Some of the changes to the system, as provided for by the pension/wastewater bill, included restrictions on state government workers' ability to count sick leave towards retirement benefits, beginning in 2023. It also barred state employees from opening a second retirement account with the state system, if retiring and returning to work in a state job.

$5,000 in death benefits would also have been lost, according to analysis by the Herald-Leader.

Beshear, who is running for governor next year, is expected to speak with the media at 11 a.m.

House Republicans issued a statement on Thursday.

“The process deemed unconstitutional by the Supreme Court has been utilized for at least a half-century by both parties to pass critical legislation, and has never been challenged until now. The consequences of today’s unwise decision will be far-reaching – particularly for the separation of powers that lie at the heart of our system of government," the GOP lawmakers said. "While the legislature would never presume to judge the manner in which the Court conducts judicial business, we are nonetheless bound by its decision, no matter how ill-advised. This unfortunate decision now subjects decades of good legislation to potential legal challenges, while revealing a complete and total lack of understanding for the separation of powers. It disrespects the hard work done by the people’s elected representatives and ignores the constitutional foundations of the three branches of government."

"Because of this disappointing ruling, state employee retirement will continue to be the most insolvent pension system in America, and will serve as a drag on Kentucky’s entire economy. Senate Bill 151 was the first step in moving our pension systems toward a new day of solvency and health. Today’s decision puts retirement checks for hardworking public employees at risk, and is a major setback to the difficult work undertaken to reverse the indecision and inaction of the past two decades. Despite this, we are committed to leading in the effort to enact a solution for the critical situation that once again faces our Commonwealth.”

The Kentucky Democratic Party issued a statement on Thursday morning.

“A unanimous decision from the Kentucky Supreme Court that Senate Bill 151 is unconstitutional sends a clear message to Matt Bevin and Republican lawmakers: you can’t change a sewer bill in the middle of the night and use it to flush the retirement benefits of our teachers, police, firefighters and other state workers at the last minute with no public input," KDP Chairman Ben Self said.

“But make no mistake, Matt Bevin and the Republicans will continue the attacks on hardworking Kentuckians and try to pass even more benefit cuts in this coming legislative session. The Kentucky Democratic Party intends to hold him accountable in 2019 and make him a one-term governor.”

The Kentucky Retired Teachers Association also reacted.

"The Kentucky Supreme Court’s decision today to overturn Senate Bill 151 provides the citizens of our state with a unique opportunity to put aside partisan rhetoric and come together to craft a legislative solution to our current pension crisis, one that insures dignified retirement for the thousands of our retired school teachers and those who will retire in the future," the organization stated.

"Many states have been able to enact meaningful pension reform that strikes a balance between maintaining the solvency of retirement funds while not breaking state government’s promise to provide teachers with a fair pension upon their retirement. We look forward to and remain committed to collaborating with Gov. Bevin and our legislators to find a reasonable solution to this situation that works for all stakeholders."

Local attorney Steve Megerle argued that the Supreme Court's ruling chips away at the state's separation of powers.

"Kentucky is known as having the strongest separation of powers in the land. Interesting to see the court inject itself in a question so political and one that chides a co-equal branch's rules and procedures," Megerle said.

This story will be updated.

-Michael Monks, editor & publisher