State and local government will pay nearly $800M more in pension contributions per year under new rates

12/07/2017 04:56 PM

FRANKFORT – State and local governments will be on the hook for $794 million more in pension contributions in each year of the upcoming biennium.

The Kentucky Retirement Systems board of trustees approved new actuarial numbers on Thursday that increased contribution amounts for state and local governments.

The Kentucky Employees Retirement System non-hazardous pension plan, which covers most state workers, saw the largest spike in employer contributions under the new numbers, moving from 50.4 percent of payroll to 83.4 percent of payroll. That amounts to a $448 million-per-year increase from the previous budget cycle in actuarially required contributions, setting the total yearly amount to $1.3 billion.

The other state plans – KERS hazardous and the State Police Retirement System – will see their required contributions increase by $29 million total. For KERS hazardous, the state will need to finance $61 million, or 36.9 percent of payroll, each year while SPRS will cost the state $71 million, or 146.3 percent of payroll, annually in the upcoming two-year budget cycle.

Local governments will be required to pay $317 million more each year in the next biennial budget, with the County Employees Retirement System non-hazardous costing $700 million, or 28.1 percent of payroll, and the CERS hazardous plan totaling $257 million, or 47.9 percent of payroll, annually. Those figures are up from $469 million and $171 million per year, respectively.

Contribution rates for the KERS and SPRS plans passed the board unanimously, but trustees Vince Lang, Betty Pendergrass and Jerry Wayne Powell voted against setting new rates for the CERS plans.

Lang suggested gradually phasing in lower payroll growth assumptions for the local government pensions, but KRS Chairman John Farris said that wasn’t allowed under state law.

“The time for debate was earlier this year about contribution rates,” Farris said. “We had that debate. We had spirited debate. We had two meetings where we had that debate, and it was a good discussion, and I’m one who is supportive after hearing from county judges and other folks that hopefully the legislature can come to some sort of consensus on a phase-in of those rates, but statutorily we don’t have the power to do that.”

Asked whether the numbers approved at Thursday’s meeting should provide a wake-up call to lawmakers and others affected by the increased contributions, Farris said they’re simply “a budgetary reality come early January.”

“I believe that this governor is committed to funding the (actuarially required contribution),” he said. “… I took this position with the knowledge that the governor was going to be a governor that fully funded the required contributions, and so we have those numbers.”

He also chided past KRS boards for using improper assumptions, such as 4 percent payroll growth in state government at a time when the state’s payroll stagnated.

The numbers approved by the KRS board could change depending on the outcome of upcoming pension reform talks. Gov. Matt Bevin has said he plans to call a special session ahead of next year’s budget-writing session to pass a reform bill, but most House Republicans signed a letter this week asking the governor to delay the legislation until lawmakers come back to Frankfort Jan. 2.

State Budget Director John Chilton said the “flow” of pension reform is in the hands of the General Assembly.

“My information that I’ve heard as well as what I read in the media would indicate that there’s going to be some changes to what was presented back in October,” Chilton told the KRS board.

“Some of those changes may be substantial, but I don’t know what all of those are at this point. There’s not been another draft finalized in draft form that’s been presented. When that’s done, it’ll be sent to the actuaries for rescoring, and hopefully that will happen a short time in the future.”

2 Comments

Comments

  • Ricky Lee Williams Jr. wrote on December 08, 2017 10:10 AM :

    I was wanting to write on the thread below, on Senate President Robert Stivers, but there was no bar to post. So, I will use this one and add a little bit on about the budgetary holes we are facing.

    First, the $3000 check Stivers presented, in his hometown of Manchester, is a source of the underlying problems that Kentucky, and mainly eastern Kentucky have. Constituents have become accustomed to this, and sadly, in a distorted way, this is thought to be a show of leadership. What is $3000 going to do? Not a damn thing. Stivers probably got $200 to go down there and take a picture with a $3000 check that is not going to make an ounce of difference to their situation.

    Another statistical analysis came out this month, where everyone of Stivers’ communities live in conditions of that of a 3rd world country. Now, you can’t blame this all on Robert Stivers. This was the same situation, when they moved to Clay County, Kentucky and set up roots back in the 50’s. My point being, that the poorest and least educated among us, are sending someone to Frankfort, and we have him as the Senate president leading the whole body. Details matter.

    Since this newest LRC scandal has come to our attention, we have not heard a word from Senate President Robert Stivers. We have not heard a word from LRC director David Byerman. Now, tell me why this is. Has David Byerman already went back to Nevada for the holidays? Is Robert Stivers too busy going around fund raising, taking pictures drinking whiskey? Where is the leadership from these two gentlemen? There is none. There is nothing behind the curtain.

    Now, let me tell you how sneaky President Robert Stivers is, for those of you, who don’t know how to follow magic tricks. Who do we hear speaking in the Senate? The pit bull, himself, Sen. Damon Thayer. Robert Stivers is either hiding or soaking himself in the best Kentucky bourbon he can get his hands on and allowing Damon Thayer to go on KET and any media outlet to tell voters that the senate has enough votes to pass Gov. Bevin’s proposal, without even reading it. Your senators, you send to Frankfort, don’t need to read any bills. That is what Sen. Damon Thayer all but told everyone on KET. Gov. Bevin said it is a good bill. That is all we need. This is not sarcasm friends. This is the way this bunch works. This is also why we are considered Kentucky, and they look down on us and should. They know our political operation system is one of the worst in the nation, if not the worst. The roles of the two chambers are beginning to flip. The Senate is bought and paid for by lobbyists. The House is the one doing the grind work and the due diligence for the citizens. The Senate has become full of themselves. They like to keep up with the Jones’. They can’t speak if their lobbyist friends haven’t prepared a statement to be read. It has reached the point, where I don’t even know why we are electing senators. We should be bringing the lobbyists out to speak because they are the ones making the laws anyway. They can’t get enough of that Kentucky bourbon. Damon Thayers’ years of selfies has gotten contagious in the Senate. They are all photogenic.

    I’m on a roll this morning, friends, and I have a good reason to be. This bunch, that we have sent to Frankfort, is not acting like leaders. We are getting more details everyday about corruption that some of these are partaking in. We are hearing more about crony government contracts being let by their friends and associates making tens of millions of dollars, while Robert Stivers is going back home, looking like Santa Claus before Christmas, handing out a big $3000 check like he has done something. Robert Stivers and Hal Rogers are the king of pork. They wouldn’t pick up the phone for a $3000 contract to be bidded out. But, they will make a big deal out of $3000 check for these poor school kids to fight over. This is what fighting over crumbs looks like, friends.

    To Nick Storm: Nick, give us a list of any member of the General Assembly, who has been there longer than 10 years. Every member on that list, who has been there over 10 years, needs to explain why we shouldn’t vote them out and explain how we got into this $60 billion hole. We need to start voting some of these bums out. People in leadership should be the main focus as targets in their districts. RL

  • JoeB wrote on December 10, 2017 10:38 AM :

    I wholeheartedly agree with the comments you made above about Stivers, Robinson, Thayer,etc.They all need to be sent home on a rail. I have been told that the most dangerous place in Frankfort is to get between Damon Thayer and a microphone. He sure is full of himself.

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