Major problems still remain with pension bill, former KRS trustee says

03/05/2018 03:31 PM

The latest version of a pension reform bill to be amended in committee is “among the worst bills” former KRS trustee Chris Tobe has seen because it’s bad for both retirees and the solvency of the plans, he said.

Tobe thinks many of the provisions of the bill will have to withstand legal challenges. More than 20 provisions of the bill have been identified by by the Attorney General as violating the inviolable contract with retirees.

“The bill itself, to me had no credibility on the benefit side,” Tobe said in an interview with Pure Politics on Monday. “On the underlying side pushing the level dollar funding… It can work if you have a budget surplus, it’s kind of like a mortgage going from a 30 year mortgage to a 15 year mortgage if you’ve got extra money, but if you’re using the money and the kids don’t have lunch money — if you’re in a deficit like we are it actually helps to destroy the pensions.”

The former KRS trustee says there’s only a handful of things that can be done in the situation lawmakers find themselves — cut benefits, which he says is illegal, raise revenue or shift the liability. Tobe sees lawmakers shifting debt from the state to local school districts, many of which he says are already facing insolvency.

“To cut a teacher’s pension from $40,000 to $30,000 the only way to do it is to Chapter 9 Municipal Bankruptcy,” he said, which he feels like the state is trying to do by shifting debt to local communities.

Tobe would like to see the state pay the full ARC payments, let in more transparency into the retirement systems investments, and allow the County Employee Retirement System to separate from the Kentucky Retirement Systems.

Watch the full interview below:


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