Suggested Ky. pension changes might be too little too late, says pension system consultant
11/29/2012 09:34 AM
Even moving an extra $300 million a year into Kentucky’s public employee retirement fund and tweaking benefits for future hires might not be enough to stave off financial disaster, said Chris Tobe, a former Kentucky Retirement System board member.
Tobe, now a Louisville-based pension consultant, said the fund for the Kentucky Employee Retirement System might have been so irreparably harmed by years of underfunding, overestimation of investment income and increasing benefits that it’s no longer a matter of if the fund will go bust — but when.
“I think the pensions have already pushed Kentucky off the fiscal cliff. It is just how we are going to land and how though the landing it is,” Tobe said this week on Pure Politics (at 0:36 of the interview).
Tobe offered his analysis of the recommendations made last week by a legislative task force.
His main criticism was that none of the recommendations called for more transparency in the Kentucky Retirement System so citizens and watchdogs can no how much individual pensioners are receiving — the way public employee salaries are made available — and to know which quasi-governmental agencies are included in the pension system.
“If we had full pension disclosure, we would already know about all these ghosts because all of them are collecting pensions,” Tobe said, referring to state Auditor Adam Edelen’s review of special taxing districts — unelected boards, many of which have employees who participate in the public employee pension system (6:25).
Tobe said it’s worth watching what happens in Illinois, which has a pension system that is teetering on the brink of bankruptcy. He said that could determine much of Kentucky’s future path.
“I just don’t know if that chasm can be averted. How can we get taxes and cut spending and raise taxes to fill an $800 million gap?” (at 9:15)
Below the Fold
Auditor-elect Mike Harmon joins calls for KRS director's resignation; names early members of transition team
Subscribe and get the latest political intelligence delivered to your inbox.