Thayer to lawmakers: Don't throw out pension bill with bipartisan support because of one report
02/12/2013 07:41 PM
The Senate Republican leader took the floor Tuesday to defend pension reforms the Senate passed last week, saying although the legislature’s actuary revealed one provision might cost slightly more, the changes overall would save Kentucky $10 billion over 20 years.
Sen. Damon Thayer, R-Georgetown, told his colleagues — and by extension the state House that now has possession of the pension reform bill — that General Assembly must make changes to the Kentucky Retirement System before it goes broke.
SB 2 passed the Senate last week with a bipartisan vote of 33-5. The bill mirrors the interim public pension task force recommendations from last year, which includes fully funding the required payments into the retirement system and ending cost of living adjustments.
Those changes would stop the financial hemorrhaging of the Kentucky Retirement System, which handles pension for state, county and city employees and the state police. The changes would save billions of dollars compared to the path the system is currently on, Thayer said.
However, the Courier-Journal was first to report Saturday that an actuarial study conducted for the Legislative Research Commission showed a proposed new benefit structure for future hires that the bill contains might cost the state slightly more over 20 years than the current system.
A coalition of retirees and Jason Bailey, director of the progressive think-tank the Kentucky Center for Economic Policy, told reporters Monday that it could cost $55 million more over 20 years.
Thayer said the legislature shouldn’t throw out the bill because of one report showing .02 percent cost difference over two decades.
Thayer pointed to charts with projections contained from the same Feb. 7 actuarial report prepared by the firm Cavanaugh MacDonald for the legislature.
With the changes contained in SB 2, the state’s contribution into the Kentucky Retirement System fund would essentially flat-line at about 40 percent of its total payroll over the next 20 years. If nothing is done, the state’s share would go up to nearly 65 percent by 2032 — if it doesn’t go broke first.
“When Cavanaugh MacDonald compared implementing all the changes in SB 2 with keeping the current plan with no other changes, the savings were dramatic.’ Dramatic, as evidenced by this chart,” Thayer said.
House leaders said Tuesday they plan to make some changes to SB 2, including designating a source of funding to cover the increased payments into the Kentucky Retirement System and changes to the proposed hybrid cash-balance benefit structure for future hires.
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