ASHLAND —
Another independent report shows the Kentucky Employees Retirement System that guarantees benefits to some 84,000 current and retired state employees is on shaky financial ground but still able to meet its financial obligations. The report by the Washington-based Center for State and Local Government Excellence gives yet another reason for legislators to take a closer look at shoring up the retirement fund, including making more changes in the retirement benefits offered future state workers, while still keeping the promises made to current state workers and retiree.
The report found the state’s largest retirement fund faces a $6 billion shortfall. In addition, administrators currently cash out investments each month to pay benefits. Josh Franzel, vice president of research at the nonprofit center, told The Courier-Journal that the system faces one of the most difficult funding situations in the nation, with about 40 percent of the assets it needs to cover benefits.
Kentucky Retirement Systems director Mike Burnside says the report wasn’t a surprise. Nor should it surprise legislators. For years, they have known that the pensions and health care insurance promised state retirees were too costly to sustain as more state workers retired — many of them in their early 50s or younger — and retirees lived longer. But only recently have legislators begun to address the problem by reducing the retirement benefits of new state workers.
To be sure, many of the current problems with the retirement fund are a result of a sharp decrease in the amount of income from investments, and that income surely will begin to increase as the nation’s economy improves. But to assume that the funding shortfall can be solved by simply improving the fund’s return on investments would be naive.
There is another, more disturbing problem that has led to the current woes. Since 2004, full contributions to the fund recommended by actuaries have not been made.
Burnside said a 2008 pension reform bill, which reduced benefits for new hires, set up a funding schedule that should prevent the system from going broke. Projections show that in another decade, the system should begin making its way toward full funding.
“Fifteen years from now, they will have reached the level where they are fully funding the program (each year),” Burnside said. “The bad news is that it is going to take 15 years to get there.”
That assumes that future governors and lawmakers can increase the funding while struggling with the effects of a weak economy. There’s no guarantee of that. With legislators struggling to balance the state budget, they have developed a habit of reducing payments to the retirement fund for the simple reason that there is no current shartage of funds to pay out benefits.
The funding schedule likely will require at least a 2 percent annual increase in the state’s contribution, the consultant’s report said. Budget Director Mary Lassiter said that would be difficult, but not impossible to meet.
“I think we’ll do it because I think we realize we’ll have to do it,” said Rep. Mike Cherry, a Princeton Democrat and chairman of the House State Government Committee. “It’s going to be painful.”
Cherry may be right, but we will have to see it to believe it.
Editorials
Underfunded
Another report warns state pension fund on shaky ground
- Editorials
-
-
Focus on music
There will be no new trophies for winning marching band competitions for the Boyd County High School band. Nor will band members be spending as many summer days in the hot sun in band camp and autumn Saturdays taking long bus drives to compete in band festivals in distant communities.
-
Memorial Day
Unlike our other wars, the American people were never asked to sacrifice for the war in Iraq and the one still ongoing in Afghanistan. They have been wars fought by an all-voluntary military and by the “weekend soldiers” in the National Guard and in the Army, Navy and Air Force Reserve
-
Still more cuts
If you believe the cuts mandated by the two-year state budget that will take effect July 1 will have little impact on services, consider this.
-
Earmarks again?
Immediately, following the midterm elections of 2010 which saw Republicans regain control of the House of Representatives and capture seats in the U.S. Senate, Republican leaders in Congress announced they had heard the voice of the voters and vowed to cease using “earmarks,” the name given to appropriations slipped into bills by influential legislators without a vote.
-
Best in the nation
It may surprise many readers that Newsweek’s “best high school in America” is located right here in Kentucky and is open to selected students throughout the state, but then the Carol Martin Gatton Academy of Mathematics and Science at Western Kentucky University in Bowling Green is hardly your typical high school. In fact, it would be impossible for even the best public high schools to emulate the amazing success of students at the Gatton Academy.
-
After the vote
We offer today a few reflections on the messages voters sent in Tuesday’s primary election in Kentucky.
-
A mild winter
As we approach the Memorial Day weekend, long hailed as the unofficial start of the summer vacation season, we pause to reflect upon the winter that wasn’t.
-
Devices banned
Emergency breathing devices that tests have proven unreliable are being phased out under a directive issued by the federal Mine Safety and Health Administration. However, MSHA has given mine operators more than 18 months to remove all the air packs from underground mines.
-
A free weekend
In an effort to promote increased recreational use of the two lakes in the Daniel Boone National Forest, the U.S. Forest Service will offer free fishing and boating during the first weekend in June.
-
Ho-hum election
Psst! Want to know a secret? There’s a primary election Tuesday. And it’s right here in Kentucky! However, there has been so little interest in this election, that Secretary of State Alison Lundergan Grimes, the state’s top election official, is predicting that only betwixen 10 and 12 percent of the state’s eligible voters will take the time to go to the polls tomorrow.
- More Editorials Headlines
-
Focus on music
90 Guns Seized, Dozens Arrested in Oakland
Raw Video: Hail Storm Batters Oklahoma City
6-Year-Old Going to National Spelling Bee
California's Foie Gras Ban About to Begin
Video Essay: Funky Winkerbean Comic Turns 40
Hurricane Andrew Remembered, 20 Years Later
Judge's Ruling Halts Tenn. Mosque Construction
Romney in Las Vegas on Texas Primary Day
Sister Says She Reported Brother in Patz Killing
Even Fla. Police Shocked by Face-Mauling Attack
Angry Birds Spreading Their Wings
Witness Describes Fla. Face-chewing Attack
