Senate and House leaders worked together to design a plan that makes considerable improvements to our current system. It's not a perfect plan, but it sets the stage for further progress in the next few years. It also will mean significant savings to taxpayers in the generations to come by containing our costs and slowing the growth of the unfunded liability. By working in a bipartisan fashion, we were able to work quickly in this special session, passing House Bill 1 in the minimum five legislative days.

Retiree benefits can be broken down into two forms, pension payments and health insurance premiums. With health care costs skyrocketing for all employers, including state and local governments, we must find ways to shore up our health insurance fund. To that end, all employees hired after September 1 will contribute one percent of their salary toward their retirement insurance costs, in addition to their pension contribution. Teachers hired after July 1 will contribute an additional 1 percent of their salary toward retiree health insurance, above and beyond the 0.75 percent they pay currently.

House Bill 1 also extends the amount of time an employee must work in order to retire with full benefits. Under the new plan, any worker age 57 or older can retire with full benefits if their age and years of service adds up to 87. Those 65 or older, however, could retire with five years of employment.

It's important to remember that none of these changes above will affect current employees. Their retirement benefits and contributions will remain the same as they've always been.

However, there will be some changes for them going forward. The most notable is the annual cost-of-living adjustment. The current COLA is capped at 1.5 percent, but the General Assembly traditionally matches inflation increases, even if the money for that increase is not included in the budget. In the future, any COLA increase above 1.5 percent must be prefunded by the legislature, so the pension system can remain fiscally sound.

As I said earlier, this is not a complete solution, and no one is 100 percent satisfied with the bill we passed this week. House Bill 1 is, however, a good first step on the path to fiscal stability. With this legislation, we will assure our public sector employees that we will honor our obligations to them, while also assuring the taxpayers that we will not leave their children and grandchildren holding the bag for the missteps of yesterday.

In the end we must empower employees and retirees to become better informed health care consumers, which would hopefully avoid any need to reduce benefits when the Personnel Cabinet releases the new state employee health care program this fall and in the future. We must also look to a possible 401(k) plan currently being considered by the Governor's Working Group on retirement issues.

I am a member of the working group and pledge to work toward further reforms, please continue to feel free to call me toll-free at 800/372-7191 with your concerns or questions. You can also email me at damon.thayer@lrc.ky.gov. Many of you have contacted me on a range of topics and as always, I appreciate your thoughts and ideas which we take into account when passing legislation.

Thank You,
Senator Thayer

District 17

Senator Thayer represents the 17^th District which includes Owen, Scott, Grant, and Southern Kenton County. Along with being chairman of the State and Local Government Committee, Senator Thayer sits on the Transportation Committee, Agriculture and Natural Resources Committee, and Licensing and Occupations Committee. He is Senate Chairman of the Horse Farming Subcommittee and the Task Force on Elections and Constitutional Amendments.