Big pension funding requests looming for the General Assembly in next year's budget-writing session

10/28/2015 10:28 PM

FRANKFORT — Lawmakers will be asked to shell out more money for both pension systems in the upcoming budget session.

Representatives of the Kentucky Retirement Systems and the Kentucky Teachers Retirement System presented their preliminary spending requests to the Interim Joint Committee on State Government on Wednesday.

KRS Executive Director Bill Thielen — who received a more than 25 percent raise from the KRS Board of Trustees on Friday to call off his retirement, according to reports by The Courier-Journal and the Kentucky Chamber of Commerce — said his agency will likely seek an extra $130.4 million next biennium based on current projections, nothing that the KRS board will set its requested contribution rate at a Dec. 3 meeting.

Local governments, which have always paid full actuarially required contributions by law, will pay an estimated $34 million more in the upcoming biennium.

Those sums are a drop in the bucket compared to the teachers’ plan, which will look for more than $1 billion more in the upcoming two-year spending cycle — $520 million in fiscal year 2017 and $488 million in fiscal year 2018.

Beau Barnes, deputy secretary for KTRS, said that’s the amount the plan needs to remain actuarially sound.

The teachers’ plan request comes as a 23-member workgroup is looking at ways to shore up the pension system. Barnes said the group is looking at KTRS’s current funding model, a new benefit tier for new hires and potential changes to current benefits not covered by the inviolable contract with teachers.

Sen. Joe Bowen, chairman of the Senate State and Local Government Committee, said he and Rep. Mike Harmon, R-Danville, will offer legislation to improve oversight of both pension systems.

The bill will seek four ex-officio legislative members to KRS and KTRS boards, Senate confirmation of KRS and KTRS trustees and making KRS and KTRS contracts subject to the state’s Model Procurement Code. That would put contracts from the pension agencies under the purview of the Government Contract Review Committee, said Bowen, R-Owensboro.

“We feel it is incumbent upon us, myself and a member of the House, to introduce legislation to increase the oversight of the pension boards, both pension boards for that matter,” he said.

Some lawmakers also criticized Thielen’s pay raise. Rep. Phil Moffett, R-Louisville, called Thielen’s $215,000 salary, effective Dec. 1, “a slap in the face” to state workers and Rep. Diane St. Onge, R-Lakeside Park, said she was “stunned” the the KRS board offered the increase and that Thielen accepted it.

Thielen defended the pay raise on the contract that runs through June 2018, saying consultants recommended a pay raise for the next executive director. He said KRS received eight applicants in two months.

“After reviewing all of those (applicants), the board decided that none of them were suitable and began asking me if I would consider staying on,” Thielen said, noting his experience working with KRS and the General Assembly.

“And I can tell you that it wasn’t that easy a decision after nine and a half years with this system and all the issues that we have faced, and I certainly would not have at the salary that I was making at the time. The board felt like that salary needed to be at a level recommended by the consultant. She told them that you’re going to have to be in a level of $200,000 to $230,000 to attract any kind of qualified applicants.”

For those planning to dole out last fiscal year’s surplus, $82.5 million of which went to the state’s Budget Reserve Trust Fund, in the upcoming session, Senate Majority Floor Leader Damon Thayer said those monies are accounted for.

“I want everyone to understand there is no surplus in the Commonwealth of Kentucky,” said Thayer, R-Georgetown. “… I just want to caution everybody — be careful when making increased funding promises to your constituents, to your judge-executives and your mayors because it’s not going to happen.”

Kevin Wheatley

Kevin Wheatley is a reporter for Pure Politics. He joined cn|2 in September 2014 after five years at The State Journal in Frankfort, where he covered Kentucky government and politics. You can reach him at or 502-792-1135 and follow him on Twitter at @KWheatley_cn2.


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