FRANKFORT, Ky. — The Latest on efforts to fix Kentucky’s public pension systems (all times local):
An independent consulting group says Kentucky lawmakers should take away some cost-of-living raises awarded to state retirees over the past 20 years as part of a strategy to keep the retirement systems solvent.
The PFM Group told the Public Pension Oversight Board that lawmakers need to make dramatic changes to keep the state’s retirement systems from running out of money.
From 1996 to 2012, state lawmakers approved cost-of-living raises for state retirees receiving monthly benefit checks. The consultants say lawmakers should eliminate those raises. They also recommended 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.
Republican state Sen. Joe Bowen noted lawmakers would make the final decision.
Kentucky’s budget director says the state will need nearly an extra billion dollars every year to fix the state’s public pension system.
John Chilton says the state will need $700 million per year to pay toward its pension systems for state workers and teachers. Plus, the state will need an extra $200 million to put into the state’s reserves.
To find this money, lawmakers would have to make deep cuts in the state’s annual operating budget. If lawmakers exclude services like public education and Medicaid, it would require budget cuts of 34.4 percent. Chilton said lawmakers could cut $510 million from K-12 education funding to soften the severity of the cuts. If they did that, it would require budget cuts of 16.8 percent.
Kentucky’s Republican governor says he will answer questions about the state’s struggling retirement system on his Facebook page .
Gov. Matt Bevin has asked state workers and teachers to submit questions on his official Facebook page about the state’s retirement system. He says he will answer them beginning at 8 p.m. Monday via Facebook Live.
Independent consultants say state officials need an extra $700 million a year to save its pension systems. Monday, those consultants are scheduled to tell lawmakers what they can do to generate that extra money.
Bevin is expected to call a special session of the state legislature later this year to address the problem.
On Facebook, Bevin wrote that “For those retired, for those working, and for those yet to come: we WILL fix our pension systems.”
Independent consultants have said Kentucky needs an extra $700 million a year to save its public pension systems, and now lawmakers will hear some ideas on where that money could come from.
The Public Pension Oversight Board is scheduled to meet at 1 p.m. Monday to hear the final recommendations of an audit by the PFM Group. Kentucky’s public pension systems are among the worst funded in the country. Officials estimate the state is $33 billion short of the money it will need to pay retirement benefits over the next 30 years.
In May, the PFM Group told lawmakers they needed an extra $700 million a year to save the system. That’s in addition to the $2 billion taxpayers are scheduled to spend on pensions this year.