The following article was taken from the Herald-Leader archives:
Overhaul in the works for state retirees; LEGISLATORS SAY THEY HAVE A PLAN FOR HIGH COSTS OF PENSION SYSTEMS
Jack Brammer, Herald-Leader | March 3, 2007
In the waning days of this year’s legislative session, Senate Republican and Democratic leaders revealed yesterday they are working on a plan to overhaul the state’s financially strapped retirement systems.
Senate President David Williams, R-Burkesville, said the move could save the state more than $200 million over the next year and put in place a mechanism to address the skyrocketing pension costs in future state budgets.
Williams did not offer specifics on the plan but said it would not affect the benefits of current retirees and employees. “Obviously future hires will have to be affected,” he said.
Bill Hanes, executive director of the Kentucky Retirement Systems, said he could not comment on details of any plan being considered by legislators, but did say it would be “irresponsible” to make major changes in pension funds “in such a short time in this short session.” Monday will mark the 23rd day of the 30-day session.
In a floor speech about solving the more than $12 billion of unfunded liability in the state employees’ retirement system and the $7 billion of debt in the county employees’ retirement system, Williams said, “Until that resolution is made, I see very little else happening in this session of the General Assembly as far as expending dollars.”
He later said he was not threatening the Democratic-controlled House but was instead trying to stress the importance of addressing the problem.
Williams said the “resolution” enjoyed support from Republicans and Democrats in the GOP-controlled Senate. He noted that it dealt with pensions and that lawmakers will wait to address the health insurance part of the retirement system problem after it hears recommendations from a special task force.
Williams and Senate Majority Leader Dan Kelly, R-Springfield, were joined by Senate Minority Leader Ed Worley, D-Richmond, in calling on the House to commit to the plan.
House Speaker Jody Richards, D-Bowling Green, said the House is “very concerned” about the retirement systems but wants to make sure that any change is actuarially sound and does not affect current retirees.
He said House Democratic leaders will meet again Monday to discuss the issue.
There are about 300,000 people in the state retirement system.
Charles Wells, executive director of the Kentucky Association of State Employees, said, “We would hope that very soon leaders would invite state employees and front-line employee groups like ours to participate in any talks about changing the retirement systems.
“We have strong concerns about reducing benefits of future employees. That could hurt the state’s ability to recruit and obtain good employees, but we have to see the details of any plan before we could judge it.”
Gov. Ernie Fletcher has recommended that the legislature provide $25 million to the state employees’ retirement system to help reduce the unfunded liabilities of its health insurance programs.
The House budget committee approved a bill with Fletcher’s provisions. Senate Republican leaders would not say how much money they might put into the retirement programs, but Kelly said changing the structure of the retirement system was more important.
Kelly described the $25 million proposed by Fletcher for the state’s retirement system as “putting two quarts of boiling water in San Francisco Bay to heat the water there. It actually would extend the deadline when our pension system would go bankrupt (by) one month.”
In a statement yesterday, Fletcher said, “We have openly expressed our concerns with the state retirement systems and our obligations to our retirees. We look forward to the forthcoming dialogue with the Senate and the House.
“We are open to any suggestions they have, realizing that the $50 million good faith effort is just the beginning of solving the problems.”
Reach Jack Brammer at (859) 231-1302 or firstname.lastname@example.org.
Load-Date: March 3, 2007
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This article illustrates that the Kentucky Senate has been leading on the issue of pension reform for more than 10 years. It’s time for us to take action to ensure these systems are funded for the future.