Where were the outcries over Ky. pension contribution shortages? They were there, just ignored

12/09/2012 11:06 PM

Kentucky leaders who say they were blindsided by the precarious financial condition of Kentucky’s public pension systems can’t say they weren’t warned.

State retirees, the board of the Kentucky Retirement Systems and policy experts have been waving their arms about a coming calamity dating back to 2002 — the first budget year that the legislature and governor agreed to cut the state’s contributions to the main the fund.

For instance, here’s the lead to a Dec. 15, 2003, Herald-Leader article by Karla Ward:

Preventing Kentucky’s government employee retirement systems from running out of money may require hundreds of millions of dollars from tax increases, cuts in other state programs or some economic miracle within 10 years.
“If we just leave it alone, we’re going to have ourselves a huge mess,” said Michael Childress, executive director of the Kentucky Long-Term Policy Research Center.

Since then, the General Assembly and the next two governors signed off on five more biannual budgets that also shortchanged the state’s contributions into the Kentucky Retirement Systems.

(And for good measure, the 2010 General Assembly disbanded the Long-Term Policy Research Center by eliminating its $500,000 in funding.)

A legislative task force last month recommended finding more than $300 million to make the state’s full payment of more than $800 million in 2015.

Here are some of the other instances in which retirees or retirement system officials sounded the alarms starting with then-Gov. Paul Patton suggesting using some of the money allotted for the state’s payment into the Kentucky Retirement System to go to other programs, such as education.

  • Jan. 15, 2002 — Lexington Herald-Leader: “Governor would trim funding for retirement; State employees group opposing 1-year cutback.” by Jack Brammer
    Charles B. Wells, then-executive director of the Kentucky Association of State Employees said in the article:
    bq. “The administration should deliver the money the program says is needed to remain solvent,” Wells said. “It should not deviate by one penny.”
  • Jan. 9, 2002 — Lexington Herald-Leader: “Panel opposes retirement proposal” by Jack Brammer. The article said:
    bq. “The nine-member board of the Kentucky Retirement Systems voted unanimously Thursday to “steadfastly oppose” Patton’s plan. The retirement system ‘should not be used as a tool to solve short-term budget shortfall,’ the board said.”
  • Feb. 5, 2004 — Lexington Herald-Leader: “Retirement panel criticizes contribution in Fletcher’s budget; Amount is far less than actuary calls for” by Jack Brammer. From the article:
    bq. Over the next two years, Hanes said, Fletcher’s budget would provide $201 million less than what the agency’s consulting actuary says will maintain the systems’ financial integrity.
    “This will not affect benefits of current state retirees, but retirees down the road will be affected,” Hanes said.
  • Feb. 22, 2006 — Louisville Courier-Journal “Retirees rally over pension” by Tom Loftus.
    From the article:
    bq. About 500 state government employees and retirees rallied yesterday in the Capitol Rotunda, calling on lawmakers to boost funding for their pension benefits, which they say were put at risk by Gov. Ernie Fletcher’s proposed budget.
    “All we’re asking is that our current pension plan be adequately funded,” said Milton Mains, president of the Kentucky Public Retirees and a retired social worker from Kenton County. “We’re not asking for anything new.”
  • March 30, 2006 — The Bond Buyer. “Retirement System Chief keeps pushing for more funding” by Tedra DeSue.
    From the article:
    bq. In seven of the last 13 years, the system’s plans have received less than they were required to receive under current law, including a shortfall of $213 million in the current 2006-08 biennium, according to Haynes.
  • Jan. 6, 2007 — Owesboro Messenger-Inquirer editorial: “Lawmakers must focus on pensions.”
  • Feb. 2, 2007 — Lexington Herald-Leader. “Groups warn of retirement system crisis; Urge broadening of task force promised by Fletcher.” by John Stamper.
    From the article:
    bq. Calling the spiraling cost of providing health insurance and pensions to retirees a “train wreck waiting to happen,” leaders of three prominent advocacy groups urged Fletcher to quickly appoint a task force to recommend solutions and called on lawmakers to spend the state’s projected surplus shoring up the systems.
  • Jan. 30, 2008 — Louisville Courier-Journal. “The governor’s budget: Retiree systems’ shortfall to grow.” by Stephenie Steitzer.
    From the article:
    bq. Gov. Steve Beshear’s proposed two-year budget would increase the roughly $20 billion shortfall in funding for public retirement systems by nearly $800 million.
    For the next two years, Beshear is proposing the same level of funding that is in place now, which is substantially less than the recommendation of pension experts.
  • April 6, 2009 — The Associated Press (national wire). “$1Trillion hit to pensions could cost taxpayers, workers” by Barry Massey.
    The article about the collective hit to state pension plans across the country quoted then-executive director of the Kentucky Retirement System, Mike Burnside:
    “What you hear concern about out there right now is, ‘We the taxpayers are going to be stuck with a bill paying for public pensions. And we don’t want taxes raised to pay for public pensions.’ And that is understandable,” says Mike Burnside, executive director of the Kentucky Retirement Systems.
  • Oct. 26, 2009 — The Louisville Courier-Journal. “Public pension plans need $74 million increase” by Stephenie Steitzer.
    From the article:
    bq. Facing a bleak budget situation, the 2010 legislature will nevertheless be asked to increase the General Fund contribution to the public employee retirement plans by at least $74 million in the next two-year budget period, according to early Legislative Research Commission estimates.
    That’s on top of the more than $177 million allocated in the last biennium for pension and health care costs for non-hazardous-duty personnel.
    “(The retirement fund) is in a critical funding situation, and we need to get on track,” Kentucky Retirement Systems Executive Director Mike Burnside said.
  • July 8, 2010 — The Lexington Herald-Leader. “Adviser: State pension fund sinking fast” by John Cheves.
    From the article:
    Kentucky’s state pension fund could run out of money in 2019 if contributions remain inadequate and market investments sag, under a worst-case scenario presented to lawmakers Thursday.
    More likely, by 2018, the fund will pay out nearly half of its assets every year for retiree benefits, making it difficult to get the high returns it needs from large, long-term investments, pension officials said.


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