FRANKFORT, Ky. (August 28, 2015) – Representative Brad Montell, R-Shelbyville (58th District), announced today he will sponsor legislation in the 2016 Regular Session that if passed would stop the sweeping of excess funds from the Public Employees’ Health Insurance Trust Fund into the General Fund, and instead be used to address the unfunded liability within the Commonwealth’s pension systems. Rep. Montell’s bill is co-sponsored by House Republican Floor Leader Jeff Hoover, R-Jamestown; House Republican Caucus Chair Stan Lee, R-Lexington; House Republican Whip Jim DeCesare, R-Bowling Green, and several other members of the House Republican Caucus.
“I think it’s an insult when any money that is put into an account for the benefit of our state employees, whether it’s for health care or retirement, is instead swept into the General Fund when there is a surplus,” said Rep. Montell. “That excess money should be going back to our employees to help reduce the unfunded liabilities within their pension systems, which is why I filed this legislation for the next session.”
Under Rep. Montell’s proposal, designated as Bill Request 7 for the 2016 Regular Session, 75 percent of excess dollars generated within the health insurance trust fund would be directed in statue to the Kentucky Employees’ Retirement System (KERS), Kentucky Teachers’ Retirement System (KERS), Kentucky State Police Retirement System, and County Employees’ Retirement System (CERS). Rep. Montell’s bill says the amount each retirement system would receive would be based upon each individual system’s pro rata share of the total unfunded pension liabilities of the entire Commonwealth’s retirement systems based on the most recent actuarial of each system.
“According to the LRC’s budget office, in Fiscal Year 14-15 more than $93 million in excess funds from the Public Employees’ Health Insurance Trust Fund was swept to the General Fund, and another $63.5 million in excess funds was taken and placed in the Budget Reserve Trust Fund in FY 15-16 through House Bill 510,” added Rep. Montell. “If we had instead placed the majority of those funds toward our pension systems, it could have given them better financial stability instead of the continued uncertainty and low national ranking our pension systems have.”
Rep. Montell’s bill also directs the other 25 percent of excess funds remain within the Public Employees’ Health Insurance Trust Fund for a period of four calendar years from the day it is allocated to the system.