Governor says retirement funding isn't dire but pension expert points to 'very concerning' trends
06/13/2012 05:47 PM
The state might need to consider selling bonds within the next several years in order to cover its pension obligations to retired state workers, said former Kentucky Retirement Systems board member Chris Tobe.
But that would come with a high cost as well. Tobe explains why starting at 3:50 of the interview.
Tobe, a Louisville-based pension system consultant, said the latest numbers have been concerning for the Kentucky Retirement System and retirees alike. In the last year the system took in less than $1 billion in money from the state and its investments and had to pay out $1.5 billion in benefits.
Since 2003, the last three governors and the state legislature have under-funded the pension program in order to free up hundreds of millions of dollars to spend in other parts of the budget. In 2008, Gov. Steve Beshear and the legislature worked out a payment schedule to gradually bump up the state’s level of contributions into the system, which covers more than 337,000 former and current state workers.
In addition, Tobe said Kentucky’s Teacher Retirement System now ranks in the bottom third of financially sound systems nation wide because the legislature has only put in about 75 percent of what it owed. And the combination of the underfunding of the teachers and state employees’ system puts Kentucky at or very close to the bottom in national rankings.
Earlier this year, Beshear decided not to reappoint Tobe, a fellow Democrat, to the Kentucky Retirement System board.
Beshear, however, said he considers Kentucky “to be in a lot better shape” than it was before passing the payment schedule in 2008. That legislation also changed the retirement service and age requirements for state workers hired after the passage of that law. Beshear has made no commitments to any additional reforms to the system. Here is what he told Pure Politics senior reporter Don Weber on Monday:
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