KENTUCKY STATE UNIVERSITY Board of Regents

DATE:September 5, 2019
SUBJECT:HB 1, Comprehensive Universities and Quasi-Governmental Agencies Pension Reform
FROM:Government Relations
ACTION ITEM:NO

BACKGROUND:

July 2019, Governor Bevin called a special session to consider HB1, the Comprehensive Universities and Quasi-Governmental Agencies Pension Reform legislation. The bill passed the legislature and was signed into law on July 24, 2019. The law provides a one-year retroactive rate freeze at 49.47 percent of the employer contribution from July 1, 2019, through June 30, 2020. The law also provides a framework for universities seeking to voluntarily cease participation in the Kentucky Employees Retirement System on or before May 1, 2020.

SUMMARY OF PROGRAMS/ACTIVITIES: N/A

ALIGNMENT WITH STRATEGIC GOALS:

Passage of HB 1 provides a structured framework and options to address escalating pension costs. The law mandates an actuarial analysis of the University’s pension costs prior to ceasing participation, requirement to provide an alternative retirement program, and payment of the current pension liability either by lump sum or in installments. The data from the actuarial analysis will inform future pension decisions to ensure responsible fiscal management of state resources.

COMMITTEE/PROGRAM ACTION: N/A

PROGRAM IMPLICATIONS: N/A

FISCAL IMPLICATIONS:

Without the passage of HB1, the employer contribution rate would have increased from 49.47 percent to 89 percent. Therefore, additional resources to pay the employer