Same job, new job description, lower pay grade

What is the name of your state (only U.S. law)? KY
I was informed that my position was being renamed and lowered two pay grades, even though the requirements and duties are the same. I was told that I was only going to be lowered one grade since I have a degree. Now they want me to sign a job description at 2 grades lower. If I sign this, does that mean I agree to work at the lower grade? If I don't sign it, can they fire me? What are my rights? Would I be entitled to unemployment benefits?

Your signature indicates your understanding that your pay grade is being lowered. It does not signify your agreement. Your agreement is not required - it's going to happen whether you sign it or not.

Which brings us to your next question; yes, if you refuse to sign this you can be fired. Whether you WILL be fired or not is unknown, but you CAN be.

I seriously doubt that you would be eligible for unemployment since it would likely be seen as refusing work. There's always the chance that I'm wrong, depending on how deep the pay cut is. You'll have to decide if you want to take the risk. I'm not the one who will be left without income if I'm not.

Your rights are to sign the agreement and remain employed at a lower income, or to find employment that will pay you the higher rate.

If you are experiencing a deep pay cut (say, 20% or more), you might qualify for partial unemployment benefits due to your loss of income.

That's why minimum wage jobs are so great. They can never lower your pay.