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Beshear will limit special session to pension reform

FRANKFORT — Gov. Steve Beshear said Monday he will limit an expected special legislative session to one issue: an overhaul of the state retirement systems.

The Democratic governor has not yet officially issued a call for a special session but said he anticipates making an announcement Tuesday on the issue.

Legislative leaders reached an agreement last week on a pension-reform plan.

Beshear has said he would call a special session, probably to begin June 23, if leaders in the Democratic-controlled House and Republican-led Senate could reach an agreement on the complex issue.

Only the governor can call a special session and set its agenda. A special session would cost taxpayers about $60,000 a day.

--Jack Brammer

Stumbo wants slots at tracks

By Ryan Alessi
RALESSI@HERALD-LEADER.COM

FRANKFORT -- State Rep. Greg Stumbo, D-Prestonsburg, said he'll propose legislation to at least temporarily legalize slot machines at racetracks, a plan he argues is more politically palatable than the governor's earlier bid for full casinos.

Stumbo said he will pre-file a bill in the coming weeks to kick off debate before the 2009 General Assembly convenes in January.

"Maybe one of the things the legislature should consider is a trial -- authorizing a limited number of slots just at tracks and let's see what kind of a response it gets," he said. "Then we'll know after a year."

Stumbo, a former state attorney general, said he doesn't believe the state's constitution must be changed to allow slots at horse tracks -- a factor that also could simplify the debate in the General Assembly.

Earlier this year, Democratic Gov. Steve Beshear proposed allowing casinos with slot machines and table games during his first legislation session in office. But his constitutional amendment crumbled after a House committee changed the bill so that horse tracks weren't guaranteed a certain number of licenses.

Beshear ran for governor on a platform of pushing for casinos in Kentucky as a way to generate more revenue, but he has said little on the subject since his legislation's public collapse.

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Lawmakers reach pension deal; special session looms

UPDATED 3:40 p.m.: Legislative leaders say they have agreed on the all the details of a plan that would begin to address the chronically underfunded and overburdened state retirement system.

Top-ranking lawmakers from the House and Senate formally announced the details of the agreement to reporters Tuesday afternoon. They described it as a necessary starting point and pointed out that part of the bill, when drafted, would require the legislature to pay the state's full obligation to the system by 2025. The General Assembly has underfunded the state employee system.

"I think we had a good negotiation," said Senate President David Williams, R-Burkesville. "We recognize this is the beginning of what we want to do ... We do believe collectively that this bill is worth having a five-day special session over because the impact it will have overall."

Gov. Steve Beshear, who is currently on an economic development trip in Japan, could call the special session for the week of June 23 as soon as he returns, said Mike Haydon, the governor's legislative liaison.

Click here to see the details of the compromise with how it compares with current benefits and the bill from the 2008 General Assembly

Earlier, House Democrats outlined details of a tentative deal on revamping the state's retirement system to stakeholder groups, including the Kentucky Education Association which had the strongest reservations about a possible special session to address pension reforms.

KEA president Sharron Oxendine emerged from the private meeting in House Speaker Jody Richards third floor Capitol office shortly before 10 a.m. and said she was pleased about the agreement House and Senate leaders are preparing to strike later Tuesday.

"We feel like they've listened to our concerns and all of the tenets of the bill are things we've already been ... talked to about," she said.

She said the KEA, which had the largest delegation in the room with House Democrats, now approves of lawmakers going forward with a special session. "We want them to not spend a lot of time because that's money that can be used elsewhere," she said.

Oxendine and Brent McKim, president of the Jefferson County Teachers Association, said Richards told the group that House Democrats had held firm on three key issues that the employees groups felt strongly about.

"Speaker Richards told us there would be no defined contribution," Oxendine said, referring to a move toward a 401(k) system as opposed to the current pension benefit set-up.

She also said that there would be no changes to the inviolable contract between the state and existing retirees and state workers.

The third issue was whether the pending deal would address moving classified school employees, such as janitors and cafeteria workers, out of the system with county and local workers, McKim said. That issue, instead, will be studied by the working group called by Gov. Steve Beshear.

Senate Republicans have floated the issue of moving the classified school workers into a different system, an idea the KEA has questioned.

McKim said splitting the classified employees from the county system would be "a lot like a divorce where you're fighting over the assets."

Reps. Joni Jenkins of Shively and Mary Lou Marzian of Louisville, also sat in on the meeting and confirmed that the pending agreement resembles a House bill that died in the final moments of the 2008 General Assembly, with a few changes.

Jenkins said the largest change is that state employees who retire would have to wait three months instead of one before being rehired by the state and would not be able to draw a second pension for their new job.

Under the deal, employees would be eligible to retire once they reach 87 years of their combined age and years of service instead of 85, Oxendine said.

UPDATE 12:02 p.m.: House and Senate leaders were supposed to shake on the agreement at an 11 a.m. meeting. But that session never got started.

House Democrats, who showed up late, conferred privately then told the other lawmakers they needed to review one final detail. Richards said he didn't believe the issue would derail an agreement.

Before the meeting was supposed to begin, Republican Senate President David Williams repeated his view that the potential deal didn't go as far as the GOP caucus wanted but would be a step toward bolstering the sagging financial condition of the retirement systems.

- Ryan Alessi

Legislative leaders reach tentative agreement on pension plan

UPDATE 5:58 P.M. Legislative leaders have reached a tentative agreement on a plan to overhaul the state retirement systems.

They said they will contact lawmakers tonight to get their views on the plan and possibly announce details of it Tuesday morning.

Legislative leaders adjourned their negotiations today at 5:38 p.m.

After meeting for nearly three hours behind closed doors, lawmakers broke for lunch claiming that they had made some progress in agreeing on major components of an agreement to restructure the state's cash strapped public employee pension system.

Democratic Whip Rob Wilkey said the group of 19 legislative leaders "identified probably a dozen" issues to still work through.

"We're not too far apart," he said. The biggest sticking points will likely be over whether to have future employees pay into a defined contribution retirement system, similar to a 401(k) set-up and whether to alter the inviolable contract between the state and existing employees, Wilkey said.

Senate President David Williams, R-Burkesville, declined to predict whether they will succeed in getting an agreement today. But he said the morning talks were productive.

If leaders can agree, Gov. Steve Beshear wants to call a special session before the end of the month for legislators to approve changes to the system. But Beshear and legislative leaders have said they won't go forward with a extraordinary General Assembly session without a prior agreement.

Teachers and other unions have expressed concern about some of the discussed changes, specifically the move to a defined contribution system.

"I don't know if it's a deal breaker. We're just not going to do it," said House Speaker Jody Richards, D-Bowling Green, after the morning meeting. "That's been our position."

The legislative leaders will resume their private meetings after 2:30 p.m. Monday.

UPDATE 3:10 p.m. Meanwhile, the Kentucky Association of Counties announced that its executive committee voted in support of a special session to address the retirement system.

The systems are facing a $26 billion shortfall.

"KACo is committed to supporting the efforts of the Governor and the legislature to address long-term solutions to the current deficit in properly funding public pension plans.” said David Jenkins, the Spencer County judge-executive and president of the organization. “The special session proposed by Gov. Beshear is a good starting point in addressing a comprehensive reform of the public pension programs in Kentucky, including recommendations from the workgroup to promote additional legislation that addresses the remaining issues facing the Kentucky Retirement System.”

- Ryan Alessi

Williams shelves office renovations

UPDATED at 4:43 P.M.: Senate President David Williams said in a letter to Legislative Research Commission Director Robert Sherman that he was suspending a planned $449,000 office renovation "due to present financial constraints affecting segments of state government."

The Herald-Leader first reported last week that the Senate office suites were slated to receive a makeover, including construction of new conference rooms and a kitchen.

Williams noted in his letter that the project "was to be the completion of a multi-year endeavor to provide adequate meeting space for Kentucky citizens as well as updated and functional office accommodations for legislators and LRC staff."

But in the end, after receiving bids Monday that showed the project would cost nearly $450,000, Williams said he would "indefinitely suspend further renovation of the second floor of the Annex."

Republican Sen. Damon Thayer, R-Georgetown, has sent a letter to GOP Senate President David Williams asking the legislature to shelve a planned $449,000 renovation of lawmakers' offices until the economy improves.

Thayer said in an interview that he heard from his constituents who were concerned about the cost of adding conference rooms, kitchens and other renovated spaces in the state Senate's office area in the Capitol Annex at a time when the state is strapped for cash.

"This was a decision that I came to on my own," he said. "I heard from a lot of my constituents who were concerned about it. They understand these are uncertain economic times, and state government needs to tighten its belt just like families and businesses. They take issue with a construction project like this taking place at this time."

The Herald-Leader's John Cheves first reported last week that the Legislative Research Commission was moving forward with the construction. Bids for the project were opened on Tuesday. The low bid was from BCD Inc. of Bardstown was for $448,997.

Thayer also said the executive branch is ripe for trims. Thayer sponsored a bill during the last General Assembly session that would have abolished the office of the state treasurer.

He said he believes that agency, which prints state checks and manages the unclaimed property fund, could be absorbed into the state Finance and Revenue Cabinet.

He called the treasurer's office "constitutionally outdated."

- Ryan Alessi

New state Senate digs to cost $448,997

Kentucky taxpayers now know exactly how much they'll pay for the latest round of improvements to state Senate offices in the Capitol Annex in Frankfort: $448,997.

That was the low bid submitted by BCD Inc. of Bardstown. Seven companies in all submitted bids, which were opened Tuesday by the Finance and Administration Cabinet.

While the rest of state government tightens its belt, the Senate wants new caucus rooms with kitchens, a press conference room and a Senate lounge. The 5,250 square feet of space involved in the project previously was used by executive-branch agencies, which are slowly being evicted as the General Assembly claims more space in the Capitol Annex. New furniture, appliances and electronics will be purchased.

Plans call for House offices in the Capitol Annex to be similarly enlarged and renovated in coming months. And these are simply the latest enhancements to legislative digs in the past five years, both in the Capitol Annex and in the Capitol itself.

The legislature can afford such comfort because it awarded itself a 13-percent increase in its two-year budget last winter while cutting the budgets of the executive and judicial branches.

Gov. Steve Beshear was asked about the renovations on Tuesday by reporters and had this to say:

“I’m not going to get into an argument about how they’re spending their money. But it would concern me. Obviously we’re in tight times right now, and I think you have to set priorities. And I’m going to leave it up to them to set theirs.”

-- John Cheves

Three education groups back special session

FRANKFORT -- Three Kentucky education groups are backing Gov. Steve Beshear’s plan for a special legislative session later this month on public employee pension reform.

In a joint announcement Tuesday, the Kentucky Association of School Administrators, the Kentucky Association of School Superintendents and the Kentucky School Boards Association supported the Democratic governor’s proposal to begin to overhaul the state’s retirement systems in a possible session to begin June 23.

 “This endorsement followed assurances by the governor’s office that an issue of paramount importance to local school leaders – any changes in the retirement system in which classified school employees participate – will be thoroughly studied for action at a future time and will not be part of the proposed special session this month,” the groups said in a statement.

 “That endorsement also is based on an expectation of  ‘a place at the table’– which has not been the case so far – for the school system leaders responsible for administering costs related to school employee benefits.”

The three groups are calling for:

--A comprehensive actuarial study on the impact of moving school classified employees from their current status within the County Employees Retirement System.

--An end to the current practice of diverting resources from the Kentucky Teachers’ Retirement System’s pension fund to the program’s medical insurance fund for retired teachers’ health insurance.

“If we don’t proceed carefully on this crucial issue of pension reform, we are convinced there is the very real danger of unintended consequences that will divert critically-needed funds from classroom instruction to support an underfunded employee pension program,” the groups’ statement said.  “There are simply too many unanswered questions on the issues of classified employee pension placement for the legislature to act at this time.

“However, we also understand the importance of beginning to act to improve the solvency of Kentucky’s public employee pension programs.”

The Kentucky Education Association has expressed concerns about a special session, saying its cost of  $60,000 a day, does not set a good example of fiscal restraint at the same time inflation is 4 percent and the state is providing 1 percent raises for school employees

--Jack Brammer

General Assembly's space grab brings $400,000 in rent costs

By John Cheves
jcheves@herald-leader.com

Kentucky taxpayers will spend more than $400,000 this year on rent for state agencies that have been evicted from the Capitol Annex in Frankfort so the legislature can build itself larger and nicer offices.

Although some evicted agencies were able to relocate to state-owned buildings, space is limited, and the state auditor, state treasurer and other officials had to sign leases with private landlords in Frankfort for about $408,000 a year in total rent.

This sum does not include the one-time cost of moving or monthly utilities, or the millions of dollars spent to renovate the Capitol Annex in recent years for use by lawmakers.

And more packing boxes are on the way. The legislature passed a budget this year demanding 17,920 square feet of additional Annex space from the executive branch. Plans call for Senate and House offices and conference rooms to expand on the upper floors and receive various amenities, such as kitchens.

Whatever the final cost, the money may be taken from the state’s General Fund or its “rainy day fund,” usually saved for emergencies, according to the budget.

Critics on Monday said it makes no sense for the cash-strapped state government to move full-time employees out of a public building so part-time lawmakers can enjoy more elbow room.

“It’s just the arrogance of power. There’s no justification for legislators needing this sort of office space,” said Jim Waters, director of policy and communications for the Bluegrass Institute for Public Policy Solutions, a free-market think tank in Bowling Green.

“If anything, now would be a good time for the government to shrink a bit,” Waters said. “Instead, this is symbolic of how government continues to grow.”

State Auditor Crit Luallen said she opposes the evictions for policy and personal reasons.

Big picture, Luallen said: The state spends many millions of dollars a year on rented office space in the capital city. Officials long have decried this as wasteful and vowed to get more state employees into state-owned buildings.

Small picture: Luallen’s own office was exiled to the outskirts of Frankfort, to a one-story building originally intended to be a grocery store. Her rent is $192,542 a year for 22,652 square feet.

“We’re about as far from the Capitol as you can get and still be in Frankfort,” Luallen said. “I don’t even know how you would factor the time and expense involved in me and my staff constantly driving to the Capitol, three to five times a day during the (legislative) sessions.”

Senate President David Williams, R-Burkesville, declined through a spokeswoman to comment. House Speaker Jody Richards, D-Bowling Green, did not return a call seeking comment.

Top-ranking lawmakers start haggling over pension fix

Legislative leaders began meeting Monday to try to find common ground on overhauling the state's retirement systems but had little to say about their progress after morning negotiations.

House Speaker Jody Richards, D-Bowling Green, said his chamber likes a plan Democratic Gov. Steve Beshear presented last week.

Beshear, on Thursday, outlined key changes to the state pension systems that the House and Senate agreed upon earlier this year during the regular 2008 General Assembly session.

Among the most sweeping changes would be lowering the cost of living adjustment to 1.5 percent, requiring that state workers kick in 1 percent of their salaries to go into a pool for health insurance and raising the retirement age and length of service time for future employees.
 
But Senate President David Williams, R-Burkesville, continued to strongly hint that he preferred going beyond that. After the first three hours of talks in a closed-door session on the Capitol's third floor, he told reporters he would like to see the legislature "do all it can now"  in dealing with a $26 billion liability in the state pension programs.

Williams declined to say specifically what he and Senate leaders want done beyond Beshear's initial proposal. The Republican-led Senate has been backing a move toward a defined contribution system, which is a 401(k)-style retirement program.

Williams also expressed concern that the Kentucky Education Association and Jefferson County Teachers Association will scuttle efforts to bring about pension reforms.

The legislative leaders broke shortly after noon and are to resume their negotiation session at 2 p.m. Monday. If they can strike an agreement, Beshear wants to call a special legislative session before the end of the month to address the cash-strapped system that could go broke as early as 2022 if left unchanged.

On Tuesday, a working group that Beshear created last week will have its first meeting to study more controversial issues regarding the retirement program that could be taken up by the legislature as early as the 2009 General Assembly session. Beshear is expected to address that group of community, labor and government leaders on Tuesday.

- Jack Brammer

Jenkins to take on Clark for House Speaker Pro Tem

SPEAKER SAYS HE'S BACKING JENKINS

Rep. Joni Jenkins, a Louisville legislator who played a key role last session in leading a study committee on casino gambling, announced to House Democrats that she will seek the Speaker Pro Tem position currently held by Rep. Larry Clark of Louisville.

And she's already drawn the support of House Speaker Jody Richards, who took the rare step of weighing in publicly on an internal leadership race. He cited the inability of the five House leaders to get on the same page on key issues, particularly casino gambling, as a reason for getting involved in the race.

"I plan to support Rep. Jenkins," Richards said in an interview with the Herald-Leader. "I think we need a more cohesive leadership."

The Jenkins-Clark race sets up a competitive and potentially contentious match-up in what is shaping up to be an interesting ballot for House leadership elections in January.

Jenkins, in her letter to her Democratic colleagues, played up the need for unity among the top leadership positions in the House.

"It is very clear to me that the House Democratic Caucus must have a five member leadership team that works together for the benefit of the entire Democratic membership," she wrote in letter to the Democratic caucus.

The pro tem, which is technically elected by the full House of Democrats and Republicans, presides over the chamber when the House speaker -- currently Richards, who is the longest serving speaker in Kentucky history -- leaves the podium. It is also one of the five majority leadership positions.

Clark and Democratic Whip Rob Wilkey, who is resigning, were at odds for most of last session with the other three top-ranking Democrats: Richards, Majority Floor Leader Rocky Adkins and Caucus Chairman Charlie Hoffman.

While Richards said the relationship "wasn't as contentious as the press made it out to be," he said the internal squabbles were counterproductive and the House Democratic leadership teams must be unified to tackle tough problems ahead, such as the ongoing budget crunch.

"This is an unusual situation and a situation where we need to be cohesive. That's why I’m taking this unusual step," Richards said.

- Ryan Alessi

Hat tip: Page One