Bevin Hints At Possible Pension Changes In Interview

Aug 26, 2017

Gov. Matt Bevin
Credit J. Tyler Franklin

Kentucky Gov. Matt Bevin has criticized some state workers for inflating their public pension benefits to “stick it to the taxpayer.”

In an interview on WVLK radio, Bevin questioned why state workers were allowed to “hoard” unused sick days and use them to boost their salaries to qualify for a more lucrative retirement check. He also questioned if state workers should be allowed to purchase service time, allowing them to retire faster.

“I don’t think most people out there fully understand the way to which people have the ability to game the system,” Bevin said. “Now, some don’t, and I’m grateful for those who don’t. But some do. Should it even be possible for people to play games and stick it to the taxpayer?”

Kentucky’s various public pension systems are among the worst funded in the country. The state is about $33 billion short of the money it will need to pay retirement benefits over the next 30 years, according to the systems’ financial documents.

Bevin says the true shortfall is twice that amount.

The governor has said he plans to call a special session of the state legislature this year to change the pension system, but hasn’t yet said what changes he would seek. On Friday, he said things like unused sick days and purchasing service time should “all be on the table for discussion.”

He also indicated he would be willing to consider creating a 401(k) style retirement plan for all new hires, saying it is “what everyone in the world has done.”

Purchasing unearned service time has been mostly phased out of the state’s retirement systems, although some can still do it depending on when they were hired. Teachers hired after 2008 can purchase the final 10 months of their career to retire early.

Sick days mostly impact teachers. State workers hired after 2013 don’t get credit for unused sick days. But Kentucky teachers can be paid 30 percent of their salaries for each unused sick day when they retire. The money is then added to their final salary, which is used to calculate the size of their retirement checks. Teachers hired after 2008 are limited to 300 unused sick days.

In the past year, teachers claiming unused sick days have increased their retirement checks by an average of $193.56 per month, according to Kentucky Teachers Retirement System General Counsel Beau Barnes.

Kentucky Education Association President Stephanie Winkler said changing the sick day rules would have an “insignificant” impact on the state’s pension debt. She said teachers usually end up with a lot of sick days because it is difficult to find substitutes.

“We tend not to use sick days not because we are hoarding them but because we want to show up for our students,” she said.

Kentucky’s retirement system guarantees workers a fixed, monthly pension when they retire. A 401(k)-style plan would put money into a savings account for workers.

The Kentucky Public Pension Coalition has opposed creating a 401(k)-style plan for new hires because it would stop the flow of employee contributions into the existing pension system.

Bevin says he expects opposition to his plan, comparing it to saving a person from drowning.
“We may have to knock them out in order to get them safely to shore,” he said.