Sunday Chatter: Bad news for Ky. public pension system and for mine safety inspectors

06/01/2014 01:59 PM

A federal judge has ruled that the Louisville area mental health center can bolt from the Kentucky Retirement System under bankruptcy protection, leaving the cash-strapped state pension system to cover the cost of the mental health agency’s retirees.

Mike Wynn of the Courier-Journal reported on the decision regarding Seven Counties Services late Friday by U.S. Bankruptcy Judge Joan Lloyd.

Seven Counties had filed for bankruptcy to try to escape the system. The center’s president told Pure Politics last year that starting in July 2014, Seven Counties would have to pay 40 percent of its payroll into the pension system because of rising costs.

Seven Counties and 11 of the other 12 regional mental health agencies joined the Kentucky Retirement System starting in 1979 as a way to offer more enticing retirement benefits to prospective staff.

But the biggest employer in the Kentucky Retirement System — the state government — failed to make its full payments into the system for more than a decade, causing the pension fund to hemorrhage money as it paid out more to retirees than what it brought in year after year.

Retirees who are part of the system are now worried not only about the precedent Friday’s decision could set for other employers but also the practical impact of having an agency pull out of the pension fund without paying for its former employees who are still covered by the Kentucky Retirement System.

Shirley Clark, vice president of the Kentucky Public Retirees group, called the rulling “upsetting” and feared that it would open the flood gates for other non-profits and quasi-governmental agencies that are part of the system to leave as well.

If they leave without paying off their liabilities, “it will drive up costs for
current public employees and the employers’ share of the state’s budget
over time in a big way,” Clark said. “If the quasi groups were to leave and pay the system the amount of their unfunded liability, it may be the best thing that could happen to KRS. But leaving without paying its unfunded pension liabilities could be a
disaster.”

Jim Carroll, a former state agency communications director who now heads up an online group of retirees, said he is disappointed in the decision and concerned it will “further imperil the stability of the fragile Kentucky Employees Retirement System non-hazardous pension fund.”

Both Clark and Carroll called for the Kentucky Retirement System board to appeal the ruling.

Bill Thielen, executive director of the pension system, told Winn of the Courier-Journal that the board hasn’t made that determination.

Mine Safety agency to cut more than a third of its jobs, C-J reports

The state’s mine safety department will cut 53 jobs as part of a reorganization brought on by cutbacks in the next two-year state budget the General Assembly passed, as the Courier-Journal’s Tom Loftus reported.

Loftus found the number of job cuts, which will bring the agency to 95 from 148, in the last line of a document included with an executive order Gov. Steve Beshear issued Friday.

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