Bringing about a flurry of facts and a storm of misconceptions, Kentucky’s pension crisis has become one of the most dominating news stories in recent months.
One thing is certain: If our state pensions are not addressed in the very near future, we will face huge cuts in state funding. Education, Medicaid and other government services likely would be affected — a risk our state is not in a position to take.
So how did we get to this point? In the early 2000s Kentucky’s pensions were in a healthy condition. While there was not one single cause for the pensions’ downhill slide, factors such as faulty assumptions led to underfunding which continued throughout the decade.
The lack of proper funding over this amount of time eventually led to the critical state of our pensions today. The General Assembly took steps toward reforming the Kentucky Employees Retirement Systems and the County Employee Retirement System in 2013, but the Kentucky Teachers Retirement System was not included and the problem continued to grow.
This is not a partisan issue. In 2016, the General Assembly — Republicans and Democrats — made a commitment to address the issue. This started with a dedication of $1.2 billion annually to help with the shortfalls in KERS and KTRS as well as establishing a permanent pension fund. We also hired a third-party organization, the PFM Group, to investigate the state of our pension systems.
On Monday, PFM Group gave its final presentation to the General Assembly’s Public Pension Oversight Board, offering its recommendations on how to best address the problem. I, along with my colleagues in the General Assembly and Gov. Matt Bevin, will take PFM Group’s recommendations and craft a plan that will be implemented in a special session.
What happens if we keep kicking the can down the road? The only path forward would be to cut funding in other areas of state government.
Kindergarten-12th grade public education would bear the brunt of the force, creating larger class sizes, fewer teachers and a lower-quality education for our students.
Higher education also would feel the cuts and make college less affordable.
Medicaid, public safety and infrastructure would also suffer in this unfortunate scenario.
But there are ways to avoid that situation. There is a path forward that allows us to balance our legal and moral obligation to retirees while reforming the broken systems. Our priority is ensuring state retirees have a secure retirement that will provide for them in the years to come without taking away from other priority state programs.
Addressing this crisis will not be an easy task, but I will continue to work alongside my colleagues in the General Assembly to ensure we find a solution that provides for our retirees while being responsible stewards for taxpayer dollars.