Graham and other Ky. lawmakers not convinced pension system changes will work

11/05/2013 09:56 AM

This summer, during the National Conference on State Legislature’s national convention, 10 Kentucky lawmakers circulated a letter warning legislators from other states about any potential pension system fixes suggested by the Pew Charitable Trusts.

The Kentucky General Assembly had months earlier passed changes to the Kentucky Retirement System that covers benefits to retired state and local government workers, as well as the state police and employees of some quasi-governmental organizations.

Facing a rapidly dwindling fund that couldn’t cover more than 30 percent of its health and retirement benefits without changes, the General Assembly passed a measure that generated about $100 million in new taxes a year to help the state make its full payment into the retirement fund. But it also changed the benefits for employees hired after July 1 so that they would have what’s called a cash-balance system instead of a set pension determined by their salaries and years of service.

The cash-balance system is like a hybrid between a pension and 401(k) in which a percentage of the workers’ paychecks go into an account, is matched by the state and is guaranteed by the retirement system to get at least a 4 percent return on the money.

But in the letter, the 10 lawmakers said they’re not convinced that approach will save the state in the long-run. And they said they felt hoodwinked by Pew. Read the letter (provided to Pure Politics from an attendee of the NCSL conference): Ky lawmakers letter.pdf

One of those lawmakers who signed the letter was Rep. Derrick Graham, D-Frankfort who represents the highest concentration of retired and current state workers. He explained his concerns in a recent interview:

Graham also responded to bills that will be introduced by Republican Sen. Chris McDaniel of Taylor Mill. McDaniel told Pure Politics last week that he will push legislation to strip officials of their pensions if they’re convicted of felonies or for misdemeanors related to violating the public’s trust. And McDaniel will back a bill to allow the public to find out how much individual pensioners get in benefits from the system. Currently, that information is exempt from Kentucky open records law, although the system did release the number of recipients who received
more than $100,000 a year.

But Graham said he has concerns with both proposals:

About Ryan Alessi

Ryan Alessi joined cn|2 in May 2010 as senior managing editor and host of Pure Politics. He has covered politics for more than 10 years, including 7 years as a reporter for the Lexington Herald-Leader. Follow Ryan on Twitter @cn2Alessi. Ryan can be reached at 502-792-1135 or ryan.alessi@twcnews.com.

Comments

  • viewer wrote on November 05, 2013 10:24 AM :

    This is a perfect of example of whats wrong with Frankfort and how we got here. We can’t get anywhere with lack of vision and courage to do whats right for us all. Not just for state employees… If you get caught like Ritchie Farmer did , not only is he not paying back all he stoled , but we have to house him , and pay him a pension for life. If you start fining them more than they steal , and take away their pensions , we will see a more honest state employee. Fact !!!

    To Mr and Mrs state employee. The state of Ky is broke. I am not blaming you and I thank you for all you do for us all. What I’m saying is we can’t go on the way it is. Greg Stumbo and a lot of others have givin out jobs for votes. We have 30 percent or more employees than we need. Thats the truth. We have promised you guys way to much. Wall Street is rigged and very few outside gov gets pensions now. Those days where good, but coming to a sobering end. Most state employees are good decent people , but the talent level that are coming in couldn’t make it in the real world. I’m sorry but that’s the truth. When was the last time you passed state highway workers on road where they all were working ? I have never seen them all have shelves in their hands. Never… The people that are coming on now are people who knows someone , or their just for the benifits. I can name 2 buildings in Frankfort where that not one employee doens’t spend atleast 2 hours a day on social media. Where the assistant has to have a assistant. That doesn’t work in the real world. IF you need better whistleblower laws stand up and say it…. But there is too much waste and fraud in state government and the day is coming where you guys have got to help us save money. If not you guys will be hurting in the next few years. The numbers don’t lie and the numbers don’t look good. This can not go on without change…. Putting a person on pay roll just for job growth numbers isn’t how economy works. Get the right number of people to do the job and cut the waste. The viewer

  • viewer wrote on November 05, 2013 10:40 AM :

    I want someone to explain to me what a state employee means when they say ( they have bought their time on the pension plan ) ? I don’t understand how this process works.

    I don’t see how the pension plan can be saved. The stock market will take a dive in the next few months similiar to 2008. The books have got to be opened for us to take a look of how it got in the shape it has. If you watch whats going on in Detoit now , you will see that the employees got 30 percent more than they should’ve been givin. When you think you are already a victim , and the money isn’t yours , you can make a reason for giving it out to your friends and co-workers…It will be same here in Ky and thats why a few don’t want them opened. Either open the books or you will lose half of your pension soon without oversight. Fact. The viewer

  • Cat Balz wrote on November 05, 2013 06:51 PM :

    Here’s Graham’s two priorities..(1) Whatever the teachers’ union says (2) Whatever state workers and state retirees say. That’s about it. Of course, Graham is a young man, and he has been pulling a nice pension for years while Kentuckians without government jobs are struggling and guys like Graham have no clue about the private sector.

  • Jim Carroll wrote on November 06, 2013 06:40 AM :

    “Opening the books” has nothing to do with revealing the pension benefits of individual employees. Anyone can visit the KRS Web site and see exactly how much money the various funds have. How did KRS get in the shape it is in? That’s has been discussed in detail over the last year — benefits that weren’t paid for, the stock market downturn in 2008, and most of all, the legislature’s decade-long failure to pay the full employer contribution. The neglect of the legislature (and compliant governors) created a situation in which the KERS non-hazardous loses value even when the stock market rises. That’s why the full employer contribution is essential to propping up the fund.

  • name with held wrote on November 06, 2013 06:52 AM :

    To viewer: state employees can buy time on their pension plan to get them an earlier retirement date and increase the value of their pension. I don’t fully understand it, nor do I like it.

    Also, I agree with you that most, if not all, pension plans are an upcoming disaster as they are mostly invested in a very speculative stock market. I too think it will be bad.

  • Suzanne Bernert wrote on November 07, 2013 10:28 PM :

    When will the media and the public realize that one of the reasons we are in this mess is that the Legislature was not paying the amount required for state employees for many years? Starting back in the Brereton Jones day, James Ramsey (yes, the current U of L president) proposed shorting the actuary payment do they could give the money to other pet projects. They kept kicking the can down the road so they could look good at home. Some of the signees of this letter went along with this Ponzi Scheme. The employees and other government and non-government (let in as favors by the politicos) paid their portions, as required by law. The Legislature is required by law, too, but they exempt themselves with every budget. The best funded plan is the Judicial/Legislative, followed by CERS (cities and counties). Coming is dead last is the KERS (state employees). Prior to 2008, the plan had been shorted for at least 10 years. The stock market crash revealed this house of cards. On top of that, KRS awarded buddy contracts to manage the money. NO BIDS, NO PERFORMANCE REQUIREMENTS, NO ACCOUNTABILITY.

    The non-state employers, the employees did their part, paid in what was required – when will the Legislators and Governors that did this to the pensions be held accountable?

  • Cumberland Gap wrote on November 11, 2013 10:26 AM :

    Viewer: When was the last time you passed state highway workers on road where they all were working ?

    Amswer: The construction crews you see are from private contractors who won the bid to do the work. Construction work is carried out in starts and stops.

What do you have to say?





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