McDaniel says he's working on solutions for quasi-governmental agencies within the pension system

06/04/2013 10:53 AM

While lawmakers say there is more left to do to bring relief to quasi-governmental agencies within the pension system, there is a limit to what they’ll support when they return to Frankfort in January for the budget session.

Sen. Chris McDaniel, R-Taylor Mill, has been an advocate of reforms to the Kentucky Retirement System in his first term. He filed legislation which would have ended legislative reciprocity and more transparency within the retirement system – something he says he’ll file again.

McDaniel said there will have to be more political will to talk about the issues still facing the retirement system including non-governmental organizations within the retirement system, but that the most important thing is to honor the commitment to fund Kentucky’s obligation to the pension plan.

One of those non-governmental agencies who make up part of the retirement system is Seven Counties , one of the commonwealth’s largest mental health services agencies, and they say increased contribution rates could force them to close their doors in 2014. Or, if the federal bankruptcy court let’s the agency out of the retirement system it could weaken the already wobbly pension system.

“The issue is definitely being pushed in Seven Counties where they’ve already gone ahead and filed for re-organization bankruptcy, but the only debt that they seem to want to address in that is their pension obligation,” McDaniel said (3:30). “I am not going to be for anything that causes a tax payer funded bailout of non-governmental organizations, because this could set a dangerous precedent – our pensions systems literally have hundreds and hundreds non-governmental agencies involved in the pension plan.”

McDaniel said the scenario to solve the problems with the quasi-governmental agencies will likely involve a combination of the courts and the legislature working together.

“I’m also thinking and trying to work towards how we can provide another solution for these non-governmental organizations that might give the court another option – in terms of a bankruptcy,” McDaniel said. “It’s still in it’s infant stages, but I think will see some movement on that sometime this year.”

(To hear what McDaniel has to say about the budget and tax reform watch the full interview below)


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