Pensions

Hoover: No quick fix for pension | News

FRANKFORT — Even Gov. Matt Bevin, who has promised to fix Kentucky’s public pension system problems, said he didn’t expect enthusiasm from all corners about recommended pension reforms offered by an outside consulting group.

But judging by reactions from lawmakers who will have to enact any reforms after a closed-door meeting of House members Tuesday, the reaction so far is pretty lukewarm.

“Obviously there are a lot of things in those recommendations that we just will not do and cannot do,” said House Speaker Jeff Hoover, R-Jamestown, immediately after the meeting Tuesday.

Among the recommendations offered at a hearing Monday of the Pension Oversight Board, the financial consulting firm, The PFM Group, recommended moving new employees to 401-K type retirement plans, increasing the retirement ages for most workers, including teachers; moving new teachers onto Social Security; ending the use of accrued sick days to calculate retirement benefits; and perhaps clawing back some cost-of-living adjustments.

Those last two items — sick days and COLAs — have angered many state workers and teachers, and Bevin during a Facebook Q and A Monday night, criticized teachers who use the sick day calculation and those who might retire before reforms are enacted to preserve their benefits.

Bevin said he hoped teachers don’t think “so little of their responsibility and their obligations to their students and the families . . . that they would literally walk out on their classrooms, in their own self-interest, that’s an unfortunate decision I would certainly hope that a teacher would not make.”

But Bevin also assured those logging on to his Facebook page — as he has previously — that any reforms will not be enacted immediately and state workers will have sufficient time to analyze whether it’s best to continue working or retire.

Hoover, who is married to a first-grade teacher, said he was disappointed with Bevin’s comments about teachers and promised he would not support legislation which did not include an effective date at least 90 days after passage and possibly as much as six months after passage.

He said when he asked his wife how many sick days she’s accrued, she couldn’t answer and that most teachers go to work when they don’t feel well because they feel an obligation to their students — rather than building sick days to boost retirement income.

Still, Hoover said, “We do have to look at how we handle sick days as go forward.” He said he thinks it would be politically difficult to take back COLAs already given to workers and retirees but said there’s been no discussion of that specific recommendation yet.

Hoover said he could support placing new hires into a 401-K, defined contribution plan, but “beyond that I’m not going to say anything other than to wait and see what we can agree on collectively.”

But Hoover didn’t sound enthusiastic about passing a tax reform bill which might offer more revenue to help deal with the pension problems. Bevin’s budget director, John Chilton, told the oversight board on Monday the state needs $1 billion in additional funds to cover current spending and meet its pension obligations.

At one time, Bevin proposed taking up pension reform and tax reform in one special session, but Hoover and other lawmakers apparently persuaded him to delay any action on tax reform — and Bevin has also said he won’t raise taxes to pay for the pension problems caused by previous decisions by policymakers. He is expected to call a special session on pensions this fall, perhaps in October.

Hoover said lawmakers can’t produce a quick fix for pensions but can lay a “foundation with structural changes to make the system better as we move forward.”

And, he said, “I think it can be done — setting that foundation — without tax reform.”

That’s not the view of a couple of Democrats who attended the meeting.

“We’re looking at a problem with one hand tied behind our backs,” was the way Rep. Reginald Meeks, D-Louisville, put it.

Rep. James Kay, D-Versailles, said tax reform and budget discussions should be tied to pension reform because any pension reform will affect funding for other critical government services like education.

Both said they don’t believe there are enough votes — even among Republicans — to adopt the PFM recommendations in their entirety.

Also on Tuesday, the governor’s press office sent out an op-ed signed by Bevin, Hoover and Senate President Robert Stivers, R-Manchester, promising to address the pension underfunding problem while ensuring that “retired teachers and other public employees are not negatively affected by any required pension changes.”

But the op-ed also says failure to address the problem will threaten the pension systems with bankruptcy and endanger funding for other government services.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort; foollow him on Twitter @cnhifrankfort.

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