$1,431,234 more per year starting next July.
That’s how much more State Budget Director John Chilton says six local government agencies in Rowan County would have to pay, starting next fiscal year, as their share of employee retirement in the County Employees Retirement System (CERS).
That figure represents a 50.47 percent increase in the employer contribution for the current fiscal year.
Receiving notice of the potential increases were the school board ($464,787); Tourism Commission ($22,083); Fiscal Court ($449,985); City of Morehead ($306,985); Utility Plant Board ($162,102); and Public library ($25,292).
Chilton’s chilling letter says clearly that the increases, which total $345 million statewide, will become necessary if the General Assembly takes no action on state pension reform in a promised special session later this year.
In other words, Chilton is saying that Gov. Matt Bevin’s announced intention to reform public retirement systems in Kentucky is going to happen with or without new funding from the legislature.
If the General Assembly doesn’t help, any increase in employer contributions could become the responsibility of local governments.
A commentary recently distributed statewide to newspapers said Bevin and Republican leaders in the General Assembly were determined to fix the underfunding of the retirement systems and to use realistic financial projections going forward.
Nothing has been said publicly about cities, counties, special districts and other CERS employers being expected to contribute more or that employees would pay more.
We believe the Chilton letter is a scare tactic designed to motivate local government leaders to pressure their legislators to address the problem during the special session.
Another factor could become the $350 million the governor has ordered state government agencies not to spend in their current budgets ending June 30.
The 17.4 percent budget cut does not affect public education at any level or corrections or Medicaid or the judicial and legislative budgets.
It came on the heels of a projected shortfall of $200 million in the state general fund by the end of the fiscal year.
In our opinion, trying to bully local governments won’t solve the pension crisis. Instead, we should be boosting state revenue for the first time since 1990.