A day after Gov. Matt Bevin signed a bill overhauling retirement benefits for public workers, Attorney General Andy Beshear has filed a lawsuit to try and block it.
The statewide unions for public school teachers and police also joined the challenge.
Beshear argues the new law will lead to mass-retirement of current employees, creating an “imminent” threat to the state.
“The rights of teachers and firefighters and others have been violated and we’ve seen government at its worst,” Beshear said. “It’s important that the Supreme Court issue a decision on that as quickly as we can. The timing is ultimately up to them.”
Beshear has also filed a motion to have the new law blocked while the lawsuit is pending in Franklin Circuit Court.
The new law affects current workers by capping the amount of saved-up sick leave they can apply towards retirement at the end of this year.
It also no longer allows state workers to use uniform and equipment allowances to be counted as compensation that would be used to calculate their ultimate retirement benefits.
Beshear said that those parts of the pension bill violate workers’ contract rights by reducing benefits for current employees.
“The statute that provides for how sick days can be calculated is directly within the range identified by the law passed by the General Assembly creating the inviolable contract,” Beshear said.
Beshear also argues that the bill was improperly passed into law because it did not include an actuarial analysis that studied how it would affect the state’s finances.
He also said the bill wasn’t signed by the official Speaker of the Kentucky House of Representatives.
House Speaker Pro Tem David Osborne assumed the speaker’s duties earlier this year after former Speaker Jeff Hoover stepped down from the position amid a sexual harassment scandal. However, no official election took place to install Osborne in the speakership.
Elizabeth Kuhn, communications director for Gov. Bevin, accused Beshear of filing the lawsuit to curry favor with the statewide teachers union, the Kentucky Education Association.
“The Attorney General has threatened litigation since the process began, proving that he cared less about the contents of pension reform and more about scoring political points with the KEA — a reliable source for family fundraising,” Kuhn said in a statement.
“Rather than looking out for the best interest of Kentuckians, the Attorney General has chosen a political path, one that will cause irreparable damage to public employees and taxpayers.”
The new pension law mostly affects future workers, especially teachers.
Teachers will no longer receive conventional pensions that guarantee benefits for life, instead receiving “hybrid” cash-balance plans that depend on stock market growth.
Current workers hired after Jan. 1, 2014 will also no longer receive guaranteed 4 percent rate of return in their cash-balance plans; instead the state will guarantee that their accounts won’t lose money.
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