KRS leaders attempt to put a positive spin on one part of an otherwise unhappy picture

09/13/2012 05:29 PM

Kentucky’s six public pension systems, which cover nearly a half-million retired state, county and city employees and teachers don’t have nearly enough money to cover all their obligations. They are a combined $33 billion underfunded compared to what they would owe current employees and retirees.

Retirement officials testified before the program review and investigations committee Thursday and tried to put on their happiest face for the future.

“This current two and a half month time has been very good in the investment markets, and while it seems like there is a lot of bad news the pension fund has actually done very well over the last several months,” said TJ Carlson, the KRS Chief Investment Officer.

While those numbers may be a step in the right direction the state took in less than $1 billion in funds over the first three quarters of this year and paid out $1.5 billion.

Carlson broke down the causes of the unfunded liability:

1. The funds not making its investment income targets over the last six years.
2. Recent governors and the legislature signed off on increasing pensions with cost of living adjustments — but without designating a way to pay for it.
3. Actuaries were wrong on some of their estimates of salary growth and rate of retirement, which accounted for a small part of the unfunded liability.
4. Recent governors and the General Assembly approving budgets that did not make the full payments into the system. (Those payments are called ARC for Actuarially Required Contributions which is what the state owes as the workers employer.)
5. Investment earnings not made because the fund was short on contributions, and financing of unfunded liability.

About Nick Storm

Nick Storm is the Anchor and Managing Editor of Pure Politics, the only nightly program dedicated to Kentucky politics. Nick covers all of the political heavyweights and his investigative work brings to light issues that might otherwise go unnoticed, like the connection between the high profile Steubenville, Ohio rape and a Kentucky hacker whose push for further investigation could put him in federal prison. Nick is also working on a feature length bio documentary Outlaw Poet: A documentary on Ron Whitehead. Follow Nick on Twitter @NickStorm_cn2. Nick can be reached at 502-792-1107 or nicholas.storm@charter.com.

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