Friday, March 30
Last night was government at its worst. The Republican Majority bent itself into parliamentary pretzels, attaching a 291 page pension reform bill that no one had seen to a sewage bill and passing it into law in an astonishing eight hours. It was wrong.
It wasn’t, however, entirely unexpected. Elections have consequences.
Still I had hoped the landslide of resistance to Senate Bill (SB) 1 - which forced Republican leadership to pull the proposal three weeks ago - would be enough to bury it. I thought that would give us a chance to try again and do pension reform the right way.
Instead, SB 1 reappeared yesterday, like some malign Phoenix, attached by the House of Representatives to Senate Bill (SB) 151, which was originally – and appropriately – about sewage services.
The newborn SB 151 lifted feebly out of the House, 49-46, and landed in the Senate, where, after a confrontational debate, it passed 22-15 and went flying downstairs to the Governor’s desk. Although it restores the cost-of-living boosts that teachers already helped to fund, it’s still a bad bill, the product of a bad process.
How bad? Let us count the ways.
- As Charlie Rich put it, “No one knows what goes on behind closed doors,” but clearly the special interests knew that a sequestered GOP-only gathering on Wednesday was being held to square differences between House and Senate over pension and budget, including plans for special-interest-sensitive changes to the tax code. The lobbyists’ threat-sensors were twitching, and they were hovering. On the other hand, Democratic members of the conference committed weren’t allowed to participate in these discussions.
- Yesterday, at an early afternoon House committee meeting, SB 1 rose from the ashes as an attachment to a sewer bill, SB 151. It cleared quickly, as the majority waived the rule that is supposed to give members 24 hours to look at a proposal before it’s considered. The Chairman also limited testimony and questions on the bill. Thirty minutes after a rushed committee vote, SB 151, now grown to 291 pages, arrived on the House floor, having been tested by no real hearing, no real debate, and no testimony from stakeholders, including teachers.
- SB 151 passed the House and arrived in the Senate with no local impact statement, no fiscal note, no actuarial analysis, and no real opportunity for Democrats to read it, much less analyze its potential impact. This clearly violates KRS 6.350(1) which states, “A bill which would increase or decrease the benefits or increase or decrease participation in the benefits or change the actuarial accrued liability of any state-administered retirement system shall not be reported from a legislative committee of either house of the General Assembly for consideration by the full membership of that house unless the bill is accompanied by an actuarial analysis.” The “law and order” Party decided to waive this statute on three separate occasions.
- We don’t need fancy spreadsheets to know SB 151 gives new teachers no contract security, even though the state pension is supposed to compensate for their not having a Social Security pension or S.S.I. disability benefits. They also will not be protected by an inviolable contract of the kind that shelters current teachers. It also seems obvious the bill will make recruiting and keeping the best teachers more difficult. Of course, without proper testimony, this important question was left to conjecture.
- The bill transfers a substantial part of the pension risk from state government to new teachers by putting them in a so-called “hybrid cash balance” plan, in which only the return of money contributed by the employee is guaranteed. That’s right, this bill guarantees a 0% return on investment calculated on a 10-year rolling average. That means for this year’s return, you would look at the average returns of the previous 10 years. Including the worst years of the Great Recession, we don’t have a 10-year period in modern history with a negative return. Now get this . . . for the privilege of receiving this wonderful benefit, teachers and state employees will forced to give 15% of the market returns on their money to the state every year.
- SB 151 is not needed to “save the pension system,” as proponents falsely claim. Its chief sponsor in the House, Representative Bam Carney, as reported by WKYT-TV, said the bill will save $300 million in 30 years. That’s way less than one tenth of one percent of the (conservatively estimated) $40 billion unfunded liability.
- For everything that is in the bill, the one thing SB 151 is missing is funding. This bill is using that crisis to attack public educators and public education. What it doesn’t do is find the money needed to keep the promise to our current and retired workers. We’ve had bipartisan tax reform proposals, expanded gaming bills and medical marijuana bills introduced for months that can’t even get a hearing. The Majority simply points fingers and tries to shift the blame when pressed on why these proposals haven’t received a vote.
One of the most annoying parts of the SB 151 debate was watching all the finger-pointing and shame-shifting. The Republican Majority has controlled the Senate for nearly 20 years. There have been Governors from both political parties, legislators from both parties, and a great recession that all contributed to this problem. At this juncture I don’t care who failed to fund the pension system adequately. Democrats and Republicans share the blame. It’s like I tell my six-year-old twins, “I don’t care who started it.”
Speaking of the kids, Clara and Wilson came to visit me on the floor of the Senate this week. They provided our only moment of levity when both of them exuberantly answered the roll as my name was called. I think it was the only moment this week when my colleagues were amused and charmed.
The twins are ready for Easter and the immediate question is whether the Easter Bunny should bring more chocolates and fewer Jelly Bellies, or vice versa? The legislature has a more consequential choice to make the day after Easter when we hopefully receive the final version of the budget: (a) produce more revenue and avoid more cutbacks, or (b) foreswear new money and impose the consequences on constituents.
I have said from the beginning that we need more revenue and I’ve pushed for alternatives such as expanded gaming, medical marijuana, and comprehensive tax reform. We can’t wait for the Golden Goose to wander our way and lay eggs on the Capitol lawn. We need to prevent more cuts that will further damage badly-stressed programs, services and institutions, including our state pension system, our resource-starved elementary and secondary schools and our callously-funded public colleges and universities.
The closed-door deals this week produced a pension bill. We still haven’t seen a budget or a revenue plan.
Message for those in charge: There’s no Easter Bunny in the Rotunda – no Golden Goose on the lawn.
It’s up to us. We’re supposed to be the adults in this situation.