The bill introduced by Sen. Joe Bowen was notable in part for what it didn't contain. It excluded some key provisions contained in an earlier plan endorsed by Gov. Matt Bevin.
The new measure would not force any current or future state employees or teachers to move into a defined contribution 401(k)-style retirement plan. That was the cornerstone of the plan Bevin wanted lawmakers to consider in a special session that never happened last year.
Last year's proposal drew fierce opposition from hundreds of thousands of state workers and public school teachers. The backlash came in advance of an election year, the first since voters gave Republicans full control of the Kentucky legislature in 2016.
"We heard you," Bowen said in a Senate speech Tuesday evening after filing the measure. "And we adjusted our thinking because of your voices."
Bowen, an Owensboro Republican, said the new plan balances the need to stabilize the pension systems while honoring commitments to public employees.
"We have listened to key stakeholders, experts and taxpayers," he said. "And we have used their input to build a new pension plan that solves our crisis while minimally impacting state workers and teachers."
The new bill also would not require all employees and teachers to pay an extra 3 percent of their salary for a retiree health benefit. And the new version does not create an incentive for employees and teachers to retire at their earliest possible eligibility by ending the ability to accrue more service credit in their current defined benefit plan.
The legislature's top Republican leaders also weighed in on the measure.
"We are committed to funding our plan, meeting our obligations to state employees, and to making systemic reforms to ensure these systems will be financially sound for current and future employees," Senate President Robert Stivers said.
House Speaker Pro Tem David Osborne noted the backlash generated by the prior proposal.
"We listened to the concerns, and this bill represents a compromise that will bring our pension systems to the appropriate funding levels over a 30-year period," he said.
Stivers provided more details about the new plan Tuesday evening.
Instead of getting the traditional pension plan with defined benefits, new teachers would be placed in a "hybrid cash balance plan" that includes features of both a traditional pension and a 401(k)-like plan, he said.
The new proposal also differs from last year's plan in how it treats cost-of-living increases in retirement benefits. Last year's plan proposed suspending the 1.5 percent cost-of-living increases for teachers for five years. Under the new bill, the adjustments would not be suspended but would be reduced to 0.75 percent — with the lower adjustment in place for 12 years, Stivers said.
Kentucky has one of the worst-funded public pension systems in the country.
The system is at least $42 billion short of the money required to pay out benefits over the next 30 years. That's according to official estimates approved by the state's various retirement systems. Bevin, a Republican who has aggressively campaigned for pension changes, said the true number is likely double that.
The system's struggles have strained the state budget.
Bevin's two-year spending proposal includes $3.3 billion for the retirement system, or 15 percent of all state spending. The enormity of the spending prompted Bevin to propose cuts of more than 6 percent across most of state government.
Bevin's office was kept informed as the pension bill was being crafted, Bowen said. But he said measure was the product of weeks of work by lawmakers.
"Future generations of Kentuckians are counting on us to get this right," he said. "We were elected to solve big problems, and this plan unravels the biggest fiscal crisis Kentucky has ever faced."
