Did We Really Need a Task Force for This?
Today the Pension task force looking at Kentucky’s own version of the dreaded fiscal cliff, the public employee pension debacle, submitted their recommendations. By a vote of 11-1 the group submitted more than a dozen recommendations most of which anyone who balances their checkbook at their kitchen table could have come up within 30 minutes.
At the core of their recommendations is that lawmakers come up with more money to pump into the woefully underfunded system. This year the payment would be about $505 million and jump to $830 million by 2015. For a decade Kentucky has been redirecting pension fund payments to other state programs resulting in an unfunded liability of over $30 billion. That’s billion with a ‘B’.
The task force also recommended changing the way benefits for future state, county and city employees are calculated. Currently it is a formula based on years of service and highest three years of salary. This “defined benefit” allows people to move into a higher paid position the last couple of years working and greatly boost their pension payouts. The new recommendation for future employees only, would be a hybrid account where the money contributed by the state and the employee would collect 4% interest.
They also recommended pushing out being able to pay off the unfunded liability to 30 years, repealing automatic cost of living adjustments currently scheduled, adding members to the Kentucky Retirment System Board making it an 11 person board, and implementing a waiting period of two years between the time a state employee retires and the time they can go back to work for the state. These “double dippers” actually draw both a pension and a salary. Actually a better system to stop this would be to stop paying a pension to any “retired” person who goes back to work and draws a salary. In a time of 8% unemployment, these “double dippers” are taking up a position that someone who needs a job could be doing.
These recommendations will now be written into a bill to be considered during the 2013 General Assembly. This problem coupled with the state’s debt and less than stellar credit rating won us the title of Worst Managed State in the U.S. by Wall Street 24/7 in 2010. Let’s call on our Governor, Representatives, and Senators in Frankfort to do the right thing and make the hard decisions required to get us back on a path to fiscal responsibility.