How Ky.'s pension crunch is hurting mental health centers -- and why they're stuck

02/13/2013 11:01 AM

For many agencies, their payments into the Kentucky Retirement System are an increasing drain on their budgets. And some of them want to escape from the system — but can’t.

Steve Shannon, executive director of the Kentucky Association of Mental Health/Mental Retardation Programs, told Pure Politics that the amount the centers have to pay into the retirement system has inflated their administrative costs so that now centers are having more problems getting grants. (see video below)

One of the centers, Kentucky River Community Care in Jackson, tried to leave the system and is now being sued by the Kentucky Retirement System for firing most of its staff and bringing workers from a private firm, as the Herald-Leader’s John Cheves reported last summer.

The retirement system argues that the employers that joined the system are in it together. And the law doesn’t allow them to leave, which Shannon said is a problem (4:00).

Shannon said a pension isn’t even the recruiting tool that it used to be.

“It was at one point a recruiting tool. The folks coming in now aren’t as interested in it. They don’t see themselves staying at a center for 20 or 25 years or so,” Shannon said. (2:00)

Sen. Chris McDaniel, R-Taylor Mill, said earlier this year in an interview with Pure Politics that he planned to file legislation to allow entities like mental health centers to leave the system. McDaniel said Wednesday he expected to file the bill by Friday’s deadline for new Senate bills.

Here’s a 3:24 clip of what else he said he wants to see done with the pension system, including an effort to make public pension amounts.

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


  • sadkyworker wrote on February 13, 2013 05:14 PM :

    Bad news for KRS! They wanted to take advantage of it while it was good but now want to jump ship while they take their current paying in employees with them but their retirees have to stay and continue. Wrong!! NO ONE including legislators should not be allowed to leave KRS unless the program is fully funded and they should have to buy out their retirees too. These quasi-government agencies paid some of their high level employees HUGE salaries and they have been retiring in droves to take advantage of KRS!

  • Jim Isaman wrote on February 14, 2013 10:43 AM :

    Allowing agencies to withdraw from the state retirement system sets a dangerous precedent because it would allow political appointees to decide the fate of employee retirement income.

    If this precedent is set, then it’ll become all too easy for agencies to drop employer pension contributions, which may look good on an accounting ledger but in the long run would compromise organizational effectiveness because it would neither attract nor retain a qualified, professional work force.

    Services would suffer and public confidence in government would continue to deteriorate.

    It’s bad enough the General Assembly has robbed the retirement system over the years, so that there’s such a huge unfunded liability. But public servants stand to be penalized further with “hybrid” 401(k) plans proposed under SB2.

    Enough is enough. Fully fund the Kentucky Employee Retirement System.

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