Aug 29th, 2017
Independent consultants are recommending that Kentucky lawmakers take away some of the cost-of-living raises awarded to government retirees over the past two decades as part of a strategy to restore financial solvency to Kentucky’s beleaguered pension system.
That was one of several recommendations the consultants with PFM Group made to the Public Pension Oversight Board on Monday.
The consultants also recommended that lawmakers increase the retirement age to 65 for most workers, stop letting workers use leftover sick days to boost their benefits and offer a 401(k)-style plan for all new hires.
Those changes and more will be necessary, the consultants said, to keep the state’s retirement systems for government employees, including teachers and police officers, from running out of money.
Kentucky’s budget director, John Chilton, said the state will need $700 million a year for the pension systems, plus an additional $200 million to into a reserve fund.
Gov. Matt Bevin said in a statement that the PFM report “confirms the need for urgency as we resolve Kentucky’s pension crisis.”
“Change is necessary,” Bevin said. “Time is not our ally – we must act now to get our financial house in order. There is no other viable option. I am convinced we can get this done and am committed to doing so. For those now retired, for those still working and for those yet to come, we will save the public retirement systems. We will not kick the can down the road any longer. We were elected to fix this problem and we will. The fiscal abuse of Kentucky’s retirement systems is over.”
House Speaker Jeff Hoover said the pension crisis has become so dire that it affects ever level of government funding, from educating children to protecting the state’s residents to providing services to the needy.
“For several weeks, we have been involved in intense weekly meetings, each meeting lasting four to five hours, regarding this issue,” Hoover said. “This is a complex, multi-faceted problem. We, as a state, simply cannot financially sustain the current system. Changes need to be made, but what those changes are, or how we address them, right now we are not sure.”
Hoover reiterated that the PFM consultants made only recommendations in the report, and that lawmakers will seeking public input before making any decisions.
“We are committed to meeting our legal obligations with regard to our pension system,” he said. “I promise you we will continue to work hard, listen, gather facts, and make the best decision possible. I know that is what is expected and deserved and that is what we will do.”
By Tom Latek
Kentucky Today
