Last week, Attorney General Andy Beshear sent a letter to the Kentucky Legislature listing 21 ways the pension bill is illegal, in the opinion of his staff. He has now sent another letter weighing in on the substitute bill, and has come to the same conclusion: it’s still illegal.

Here is the introductory section of this current letter, followed by a list of the 21 ways his office says the pension bill is illegal. You can find the entire letter here.

Introduction

Dear Legislators:

Last week, I provided you a letter stating Senate Bill 1 (“SB 1”), if passed, would violate the inviolable contract that you, the General Assembly, made with Kentucky’s public employees. My office’s initial review of SB 1 identified at least twenty-one (21) such violations of the inviolable contract. Since that time, a Proposed Senate Substitute (“PSS”) has been published.1 As with the initial bill, the Office of the Attorney General was not provided with any advanced copy of the 293-page PSS for review.

Having now reviewed the PSS, we find that it fails to cure any of the twenty-one (21) violations identified in SB 1, including unlawful reductions in cost of living adjustments for teachers, caps on the use of sick time, and alterations to retirement allowance calculations.

As you know, the General Assembly promised Kentucky’s public employees that, in exchange for their public service, they would be guaranteed certain retirement benefits. This promise was made in the form of a contract, which was passed into law. See KRS 21.480; KRS 61.692; KRS 78.852; KRS 161.714. The statutes passed by the General Assembly declared this contract to be “inviolable,” meaning the General Assembly could not later break it.

If passed into law the PSS would breach the inviolable contract, resulting in numerous lawsuits against the Commonwealth – lawsuits the Commonwealth will lose. Like my previous letter, I have provided a description of some of the PSS’s violations below:2

1. Kentucky Teachers

  • Reduction of Cost of Living Adjustments
  • Mandatory Annual Contribution Increases
  • Cap of Sick Time Used to Increase Service Credit
  • Increase of Years of Service Requirement for 3% Benefit Factor

2. Kentucky Employees

  • Excludes Compensatory Time Payments from Creditable Compensation
  • Eliminates Uniform and Equipment Allowances from Creditable Compensation
  • Caps Service Credit for Accumulated Sick Leave
  • Prohibits Use of Sick Leave for Determination of Retirement Eligibility
  • Imposes Deductions from Creditable Compensation for Group Hospital and Medical Insurance
  • Alters Final Compensation Calculation
  • Eliminates Guaranteed Annual Interest for Hybrid Cash Balance Plan Participants

3. Kentucky State Police

  • Caps Service Credit for Accumulated Sick Leave
  • Prohibits Use of Sick Leave for Determination of Retirement Eligibility
  • Imposes Deductions from Creditable Compensation for Group Hospital and Medical Insurance

4. County Employees

  • Excludes Compensatory Time Payments from Creditable Compensation
  • Eliminates Uniform and Equipment Allowances from Creditable Compensation
  • Caps Service Credit for Accumulated Sick Leave
  • Prohibits Use of Sick Leave for Determination of Retirement Eligibility
  • Imposes Deductions from Creditable Compensation for Group Hospital and Medical Insurance
  • Alters Final Compensation Calculation
  • Eliminates Guaranteed Annual Interest for Hybrid Cash Balance Plan Participants

–30–