pensions

Thousands of public employees and teachers in Kentucky are waiting with nervous anticipation to find out what changes Kentucky lawmakers will make to their retirement plans.  The pension systems face massive shortfalls and have been rated among the worst in the country. 

Employers also have skin in the game as skyrocketing pension costs threaten their budgets and daily operations.  In a letter last month to all employers in the Kentucky Employee Retirement System, or KERS, State Budget Director John Chilton warned that pension costs could rise to as much as 84 percent of payroll in the next budget.

"As a non-profit, we’ve got no place to get that," said Finance Director Debbie Chandler at Barren River Area Safe Space.

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A federal judge has dismissed a lawsuit that challenged Kentucky’s historical underfunding of the state’s teacher pension system, but the plaintiffs say they will file the lawsuit again in a state court.

The Teachers Retirement Legal Fund argues that over recent decades, state leaders broke the law by not setting aside enough money for the Kentucky Teachers Retirement System, which manages the pensions of about 141,000 current and retired teachers.

Becca Schimmel

A bipartisan Congressional group from the Ohio Valley and beyond introduced a new bill to save pensions for retired union coal miners throughout the region.

The American Miners Pension Act, or AMP, would secure pensions for about 43,000 miners in Kentucky, Ohio and West Virginia whose retirement benefits have been undermined by the decline of the coal industry.

West Virginia Democratic Senator Joe Manchin said Congress acted to protect miners’ health benefits last year but pensions got kicked down the road.


J. Tyler Franklin, WFPL

Lawmakers are still keeping tight-lipped on possible changes to the state’s pension systems, saying they’re still privately trying to get consensus among the Republican majority in the state legislature.

Gov. Matt Bevin has promised to call a special legislative session later this year for lawmakers to pass a bill that would make changes to retirement benefits in order to address the state’s massive pension debt.

But Bevin and lawmakers have mostly been non-committal about what changes they’ll make.

The number of Kentuckians who plan to retire from state and local government this month is up nearly 38 percent from September of last year.  Some state legislators and advocates for public workers fear many of them made their decisions prematurely.

Data released Thursday by the Kentucky Retirement Systems Board of Trustees shows that about 750 public employees will retire this month. The average number of September retirements over the past four years was around 550.

Lisa Autry

Some Kentucky lawmakers say drastic recommendations issued to pay down the state’s pension debt have no legislative support. 

Legislators from south central Kentucky addressed a packed room last night of public workers and retirees in Bowling Green concerned about how pension reforms will change their benefits.  Among them was Terry Eidson who retired from state government in 2006.

"Employees and retirees are feeling a little devalued and demeaned in all this, and it just doesn't sit well," Eidson told WKU Public Radio.

Public employees in the Bowling Green region worried about their retirement benefits have a chance to hear from state lawmakers in a town hall. 

Legislators from south central Kentucky will speak in Bowling Green Wednesday evening at a public meeting hosted by the Fraternal Order of Police. 

Governor Matt Bevin has promised to call a special legislative session this fall to rein in the state's pension debt.  Consultants have recommended pay cuts for some retired workers while freezing the benefits of most other public employees. 

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Daviess County Fiscal Court has unanimously passed a resolution that supports separating the County Employees Retirement System, or CERS, from the Kentucky Retirement System. A vote at Thursday night's fiscal court meeting in Owensboro.

There are 250 Daviess County employees enrolled in the County plan. The resolution doesn't result in any change in law, but calls on the state legislature to break CERS away from KRS.

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A Kentucky middle school teacher says Gov. Matt Bevin delivered a “low blow” when he publicly scolded her in a Facebook Live video Monday night.

Bevin displayed a one-sentence email — with a curse word redacted — sent from teacher Corinne Ellis to kick off an hour-long live video session in which he selected questions from state workers about the state’s pension crisis and potential changes.

“These are the kind of things that are not helpful to this discourse,” Bevin said of Ellis’ email in the video, which as of Tuesday afternoon has been viewed more than 126,000 times.

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A consulting firm hired by the state has recommended weakening pension benefits for current and retired state workers as a way to steer Kentucky’s retirement systems away from insolvency.

The proposed changes suggested by PFM Consulting Group include shifting future state employees from defined benefit retirement plans to 401(k)-style plans and raising the retirement age to 65 for most state workers.The firm also said the state should get rid of cost-of-living raises given to state pensioners over the last 20 years and no longer allow employees to use accrued sick days and comp-time to enhance their pension benefits.


Kentucky’s public universities are debating whether to break off from the state’s troubled retirement system and create a pension plan of their own. 

New Western Kentucky University President Timothy Caboni says it’s an idea that has to be considered.   He told WKU Public Radio that pension obligations are consuming an increasing amount of money from university budgets. 

"One of the things I've learned in the last few months is how much of a cost driver pensions are for WKU," stated Caboni.  "In one of our pension systems, the university's contribution in the past decade has gone from eight percent of an employee's salary to 48 percent."

Bevin Hints At Possible Pension Changes In Interview

Aug 26, 2017
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.

A Daviess County lawmaker isn’t surprised by a consultant’s report released this week that shows how Kentucky’s pension systems became the worst funded in the nation. 

A consultant’s report released this week shows the systems combined have seen nearly $7 billion in negative cash flow since 2005, as benefits paid to retirees greatly exceeded appropriated funding. 

State Senator Joe Bowen of Owensboro co-chairs the Public Pension Oversight Board.  He says there are a number of reasons why the retirement plans got into the current crisis. 

For one, the state has been basing contributions to pension plans on a level percent of payroll rather than a level dollar.

"We funded based on an anticipation of payroll growth that never happened," Bowen told WKU Public Radio.  "Instead of just a level dollar funding mechanism, we used a percent of payroll, and the payroll never happened, so we kept getting further and further behind."

Kentucky Needs $700 Million More Per Year for Pension Debt

May 23, 2017
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Independent consultants say Kentucky taxpayers need to spend an extra $700 million each year to keep their troubled public pension systems afloat.

That's on top of the nearly $2 billion taxpayers are scheduled to spend on all of the state's retirement systems in the fiscal year that begins July 1.

State lawmakers were briefed on the report Monday. It's the second of three commissioned studies of the state's pension system. The final report will detail recommendations about how the state can raise the necessary funds.

Kentucky's Retirement Debt Soars After Pessimistic Outlook

May 18, 2017
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Kentucky's worst-in-the-nation public pension system is now worse than ever.

The state's pension debt grew by roughly $2 billion on Thursday after the retirement system's governing body made dramatic changes to long-held investment assumptions. As a result, state taxpayers will have to pay significantly more into the system to keep it solvent. Just how much more will not be known until later this year.

The bleeding is likely not over. The changes approved Thursday apply to the system that covers most state workers. But regulators are mulling similar changes to the system that covers local government workers. If approved, those changes would likely add another $2 billion more to the debt and force taxpayers to pay even more to keep the system afloat.

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