MATTHEW G. BEVIN GOVERNOR EXECUTIVE ORDER 2019-1110 Secretary of State December 5, 2019 Kentucky WHEREAS, the Commonwealth's public pensions are in severe crisis and the worst funded in the nation; and WHEREAS, ensuring the solvency of Commonwealth's public pension systems is of critical importance to the public employees who have devoted their careers to public service and are depending on their pension checks in retirement; and WHEREAS, the future financial and economic well-being of the Commonwealth is tied to the viability of the Commonwealth's pension systems; and WHEREAS, members of the Kentucky General Assembly are part-time citizen legislators, and those legislators who began participation in the Legislators’ Retirement Plan prior to January 1, 2014 are entitled to a defined benefit pension calculated by a formula based on their years of service in the le; lature, times the average salary for the individual's three highest years of salary (“high three”), times a percentage called a benefit factor; and WHEREAS, the vast majority of members of the Kentucky General Assembly who retire and collect a pension check from the Legislators’ Retirement Plan draw a pension based on the highest three years of salary tied only to their pay for service in the General Assembly, which is appropriate and actuarially sound; and ‘WnerEAs, after House Bill 299 (commonly and appropriately now referred to as the “Greed Bill”) was enacted in 2005, certain legislators who left the General Assembly for jobs in the executive and judicial branches could calculate their pensions based on their years of legislative service and on their high-three from salaries in the executive or judicial branches, a practice commonly referred to as “pension spiking” because salaries in the executive and judicial branches most often greatly exceed the salaries of part-time citizen legislators; andMATTHEW G. BEVIN GOVERNOR EXECUTIVE ORDER 2019-1110 Secretary of State December 5, 2019 Frankfort ° Kentucky ‘WHEREAS, a 2012 report by Lowell Reese titled “Kentucky Politicians’ Opulent Pensions Have Become A Modern-Day Gold Rush” brought to light this practice of pension spiking that allowed legislators to often double or more than triple the annual pension they would have received based only on their legislative salaries; and ‘WHEREAS, upon taking office on December 8, 2015, I directed members of my Cabinet to stop the practice of pension spiking by requiring former and current legislators accepting new employment in the executive branch to begin collecting their legislative pensions prior to the commencement of their employment in the executive branch, thereby keeping their high three based only on their legislative service; and Wutereas, after SB 3 was enacted in 2017, the pensions of all legislators and former legislators were subject to open records requests for the first time; and WHEREAS, subsequent media reports in early 2017 showed that many former legislators eared pensions well in excess of $100,000 per year as a result of pension spiking, with the most egregious case being a former legislator earning an astronomical pension of $154,912 per year for the remainder of his life; and ‘WuErEAs, SB 151 passed the Kentucky General Assembly in 2018 and ended the practice of pension spiking, but it never became law after the Kentucky Supreme Court struck down the law based entirely on the procedure used by the General Assembly to pass SB 151; and ‘WHEREAS, the Legislators’ Retirement Plan is currently nearly 100% funded while at the same time prior Governors and previous General Assemblies allowed the Kentucky Employees Retirement Plan (Non-Hazardous) to become nearly depleted at less than 14% funded; andSecretary of State Frankfort Kentucky MATTHEW G. BEVIN GOVERNOR EXECUTIVE ORDER 2019-1110 December 5, 2019 WHEREAS, the practice of pension spiking is actuarially unsound and fundamentally unfair, increases pension underfunding, and further places an undue burden on the taxpayers of Kentucky, most of whom receive no pension at all; and WHEREAS, ending pension spiking is in the best interest of taxpayers, public servants, and the sustainability and health of the pension systems; and WHEREAS, as Chief Magistrate vested with the executive power of the ‘Commonwealth pursuant to Section 69 of the Kentucky Constitution, the Governor has the authority to set the terms and conditions of employment of all appointees within the executive branch: NOW, THEREFORE, I, MATTHEW G. BEVIN, Governor of the Commonwealth of Kentucky, by virtue of the authority vested in me by Sections 69, 118, and 152 of the Kentucky Constitution, do hereby order and direct the following: 1. Any member of the General Assembly who first began participation in the Legislators’ Retirement Plan on or before January 1, 2014, and who is desirous of obtaining employment in the executive branch, shall retire from the General Assembly and begin collecting his or her legislative pension prior to any appointment by the Governor to any position in the executive branch. 2. Any member of the General Assembly who first began participation in the Legislators’ Retirement Plan on or before January 1, 2014, and who is desirous of obtaining employment in the judicial branch, shall retire from the General Assembly and begin collecting his or her legislative pension prior to any appointment by the Governor to any position in the judicial branch. MATTHEW G. BEVIN, Governor Commonwealth of Kentucky ALISON LUNDERGAN GRIMES Secretary of State