County employers received some shocking information this week. As the state struggles to cope with a burgeoning pension crisis, it has turned its sights on the County Employees’ Retirement System (CERS) to help clear up the shortfall. CERS includes all city and county governments, such the utility commission, emergency management service, fiscal court and and non-teaching staff of school districts.
In a statement recently released from the Office of State Budget Director John E. Chilton, the 2018-2019 rates will be substantially higher than in previous years. In fact, the amount that many Knox County employers will pay into pensions is set to increase more than fifty percent from the 2017-2018 fiscal year. Such is the case for Knox County Public Schools. Unless legislative changes occur, KCPS will be required to pay an additional $633,352 dollars into the pension system, an increase of 50.4 percent from the previous year.
“There’s no place it can come from except from General Funds,” said Gertrude Smith, Finance Officer of Knox County Board of Education. “We’ll have to look at the general fund as a whole, as it consists of a lot of things such as transportation and instructional.”
However, many are optimistic that contribution rates will not be as high as this initial assumption.
“It’s a little early to make any concrete calls, this is just what they’re saying is an assumption,” said Smith. “I’m sure there will be some kind of an increase, but it may not be exactly this.”
According to the statement from the Office of State Budget Director Chilton, “While changes can be made to moderate the cost of pensions, each of the plans will need more money in order to avoid future insolvency and to safeguard future pension benefits. Implementing the appropriate changes will require a long-term commitment by employers to reforms that are necessary to rebuild the financial foundations and that allow a path to fully sustainable fiscal health. The obvious problem is most employers cannot afford the additional pension contributions associated with the higher rates indicated above. The pension plans are in a crisis but so are employer budgets.”
Governor Matt Bevin and legislators have a plan to address the issue. First, they will evaluate the status of all of the plans using ‘conservative and realistic actuarial assumptions,’ and then examine the benefit structures to lower future costs.
Unless changes are made, Knox County employers alone will pay an additional $1,350,859 dollars into the state pension funds next year.
As the situation progresses and more details are made available concerning the Governor’s plans to correct the state’s pension shortfall, The Mountain Advocate will report them as they are made public.