With Kentucky’s pension system in a crisis, two state representatives attempted to ease concerns from some state retirees.
During the annual Kentucky Public Retirees picnic Tuesday, Sept. 12, Representatives Jim Stewart and Tim Couch took questions from the crowd.
“You have a right and a reason to worry about the system that we’re in,” said Representative Couch, who represents Leslie, Clay, and part of Laurel County. “All these pension systems, according to the Governor’s actuaries and the Governor’s budget Director, are like 36 billion dollars unfunded. What we need to realize is the report that came out the 28th of August, for myself, one of 138, that report is a non-starter for us. There is no way that we, the members of the General Assembly that has a heart, are going to take a cost of living raise away from you guys over the past ten years. That’s just a non-starter, period. So you don’t have to worry about that. And to go deeper into some of the things that’s been said, I can say comfortably, that I don’t think anything’s going to happen to your-all’s retirement.”
Despite his comments, some KPR members still had questions.
“When Beshear took office, when he first addressed the General Assembly, he said ‘Folks, we have got a very serious problem with our pensions’. In the eight years he was in office, there was only one year out of the eight that they done the ARC (Annual Retirement Contribution),” said CPA and KPR member Ancil Collett. “Now, that’s nine years that the governors and legislation have been saying, ‘we’ve got a serious problem.’ I’m beginning to wonder if the unfunded liability is too big to handle. Is it on a crash and burn course that you can’t fix?”
Representative Couch passed the baton to Representative Stewart to answer Collett’s questions.
“I’m a firm believer that they’ve inflated it to scare the people to raise the taxes. Now, I didn’t think of this, one of my constituents thought of it for me. He said ‘quit talking about funding it at 100 percent, lets start talking about taking the state retirees to forty percent, or fifty percent, and get that number and stop scaring the people.’ Now the teacher’s retirement is at sixty percent, as I understand it. The CERS is also doing good. We need to take care of the retired state employees and the ones that are working, and put some money into it, and maybe make some changes for new hirees, and get it moving in the right direction. ‘Cause there’s no way anybody’s going to come up with 36 billion dollars.”
The back-and-forth continued as Collett questioned the funding going into the pension system.
“The word is that last year, they sent 700 million more checks out then came into the system. 700 million. That’s real, that’s not inflated,” said Collett. “That means from employee contribution, employer contributions, and earning on investments, that’s the only three sources of money these systems have. They were 700 million short. Now, what happens when that becomes 900 million and then a billion? It’s going to start taking its toll on other economies in the state besides pensioners. It’s going to effect education and everything else in the state budget. Something’s got to level that out. And we can’t be sitting here a year from now, two years from now, three years from now saying ‘we’ve got a serious problem, and something’s got be done about it. There’s got to be some changes. Everybody can’t get what they want, there’s going to have to be some shared sacrifice. That thing has got to flat line.”
“I’ll agree with you, we’re at a point that something has to happen,” said Representative Couch. “All the systems are different and the funding is different. If there is a special session call, there’s going to be changes. If we’re in the situation that you’re describing, we have to. What I want retirees to realize if there’s a special session call, myself, Mr. Stewart, and a few more totally about eight or nine, we’re not going to hurt the current retirees that are in the system. That’s plain, simple fact.”