Senate committee advances bill to raise CERS retiree health subsidies, adds employee contribution

Senator Jason Mills introduced Senate Bill 10 to the Kentucky Senate State and Local Government Committee, saying the bill "will change CERS retiree health benefits available for members who began participating in the system on or before 07/01/2003." The panel voted 9-0 to advance the measure with favorable recommendation.

The bill increases the fixed-dollar monthly health subsidy for CERS nonhazardous career retirees who retire after 27 years of service from $14.63 per year of service to $40 per year of service, and raises the hazardous-duty subsidy (for retirees after 20 years of service for tier 1 and 25 years for tiers 2 and 3) from $21.94 per year of service to $50 per year of service. Mills said the changes are intended "to allow the retiree to be able to pay the cost of a single premium," restoring the original intent of the subsidy established in February 2003.

The bill also sets modest employee contribution increases to help fund the change. Nonhazardous employees on the health subsidy hired before Sept. 1, 2008, would begin contributing an additional 1 percentage point of pay (matching current tier 2/tier 3 rates). Hazardous employees would see an increase of 1 percentage point—from 1% to 2% of pay, as described in committee testimony.

Supporters from public-safety organizations told the committee they view the change as a recruitment and retention tool. Jerry Wagner, director of the Kentucky Sheriffs Association, said the bill would "fix" hiring and retention problems and permit rehiring retirees to fill positions such as school resource officers and court security. Jeremy Thompson, chief of police in Elizabethtown representing the Kentucky Chiefs Association, called the bill "a great tool for recruitment and retention." Jeff Taylor, director of legislative affairs for the Kentucky Professional Firefighters, said the subsidy increase "puts me in control of my health care cost" and could influence individual decisions about extending service.

Senators on the committee framed the bill as a negotiated compromise involving employee and employer groups. Mills said actuarial analysis indicates the nonhazardous health fund, which he described as about 22.3% funded, would not require an immediate employer contribution increase if the employee contributions occur as proposed. He said the hazardous fund, which he described as about 0.5% funded, "will likely result in a slightly higher contribution rate increasing only 2.2%" if the benefit change is adopted and contributions continue as structured.

Committee members offered supportive remarks on the measure’s collaborative development. Senator Rawlings noted the bill represents a "shared solution between employees and employers." Senator Tishner and others thanked the public-safety witnesses for their service. After a motion and second, the committee recorded a 9-0 favorable recommendation.

The bill record and testimony in committee show the measure as a policy change that increases fixed-dollar retiree subsidies while imposing limited employee-side contribution increases; the measure does not itself change other CERS benefit formulas. The committee did not adopt amendments in the hearing and advanced SB 10 with a favorable report to the full Senate.