By Tom Latek
Kentucky Today
Independent consultants are recommending that Kentucky lawmakers take away some of the cost-of-living raises awarded to government retirees over the past two decades as part of a strategy to restore financial solvency to Kentucky’s beleagered pension system.
That was one of several recommendations the consultants with PFM Group made to the Public Pension Oversight Board on Monday.
The consultants also recommended that lawmakers increase the retirement age to 65 for most workers, stop letting workers use leftover sick days to boost their benefits and offer a 401(k)-style plan for all new hires.
Those changes and more will be necessary, the consultants said, to keep the state’s retirement systems for government employees, including teachers and police officers, from running out of money.
Kentucky’s budget director, John Chilton, said the state will need $700 million a year for the pension systems, plus an additional $200 million to into a reserve fund.
Gov. Matt Bevin said in a statement that the PFM report “confirms the need for urgency as we resolve Kentucky’s pension crisis.”
“Change is necessary,” Bevin said. “Time is not our ally – we must act now to get our financial house in order. There is no other viable option. I am convinced we can get this done and am committed to doing so. For those now retired, for those still working and for those yet to come, we will save the public retirement systems. We will not kick the can down the road any longer. We were elected to fix this problem and we will. The fiscal abuse of Kentucky’s retirement systems is over.”
House Speaker Jeff Hoover said the pension crisis has become so dire that it affects ever level of government funding, from educating children to protecting the state’s residents to providing services to the needy.
“For several weeks, we have been involved in intense weekly meetings, each meeting lasting four to five hours, regarding this issue,” Hoover said. “This is a complex, multi-faceted problem. We, as a state, simply cannot financially sustain the current system. Changes need to be made, but what those changes are, or how we address them, right now we are not sure.”
Hoover reiterated that the PFM consultants made only recommendations in the report, and that lawmakers will seeking public input before making any decisions.
“We are committed to meeting our legal obligations with regard to our pension system,” he said. “I promise you we will continue to work hard, listen, gather facts, and make the best decision possible. I know that is what is expected and deserved and that is what we will do.”
It is sad that it has come to this but when you can work for 20 yrs. and retire at the age of say
45 that is not right. Everyday Americans have to work till they are 66 or order to collect their pension ie. social security. That system would be fine if the Gov. Hadn’t used the money for other things. Go figure! And I Amy tired of hearing how stressful police etc. have it. They chose that path like others have chosen theirs.
Now they have to face the facts.
Bob, you’re missing the part about how correctional officers, police officers, firefighters and teachers earn less in the state of Kentucky than their counterparts in other states. That’s part of the trade we were willing to make in order to have a safety net in our retirement years. Once these changes are made, do you think the state will be willing to pay a living wGe for the services currently being provided at a lower rate? I know very few state workers who don’t work at least two jobs if not more.