Bluegrass Beacon: Legislators boost, judge busts liberty

BluegrassBeaconLogoEditor’s note: The Bluegrass Beacon column is a weekly syndicated statewide newspaper column posted on the Bluegrass Institute website after being released to and published by newspapers statewide.

 

This edition of “Liberty Boosters and Busters” is brought to you by reasonable Kentuckians who reject racism, bigotry and censorship with every fiber of their freedom-loving beings.

Liberty Booster: The attorney general’s office decided in favor of the Bluegrass Institute Center for Open Government in its appeal challenging a Jefferson County school board meeting at a private law firm on the 28th floor of an office building in downtown Louisville on a Sunday afternoon in April.

Assistant Attorney General James Herrick ruled the meeting – held to discuss applicants for the district’s then-vacant interim superintendent’s position – violated the law requiring public agencies to conduct meetings “at specified times and places convenient to the public.”

It’s also likely the building was locked that day as it was on a subsequent Sunday when some of my colleagues at the institute tried to enter – an experience Herrick referenced in his ruling.

Liberty Buster: U.S. District Judge Danny Reeves allowed Eric Conn, the eastern Kentucky lawyer who pleaded guilty to engineering one of history’s largest Social Security fraud campaigns, to remain free on home incarceration – despite warnings against doing so by an FBI agent and witnesses claiming Conn had crossed 140 borders in eight years and had vowed to run before going to jail.

Conn ran, and likely is now sipping martinis and hanging out on the beach of some country with women for whom he previously claimed to have provided “English lessons,” and with whom the U.S. has no extradition treaty.

Yet Reeves, the judge, forced Sam Girod, an Amish farmer from rural Bath County, to remain in jail for months without bond while awaiting trial before handing him a harsh six-year prison sentence for the “crime” of mislabeling homemade herbal skin salves containing such dangerous (sarcasm dripping here) ingredients as chickweed and peppermint and not acquiescing to the Food and Drug Administration’s ideological thuggery.

Prosecutors, gung-ho though they were to destroy this man and ridicule his way of life, failed to produce a single victim harmed by Girod’s concoctions.

Yet Reeves permitted Conn, a wealthy white-collar criminal whose fraud resulted in 1,500 people losing their benefits and at least one person committing suicide, to remain out of jail.

He also handed a weak six-month sentence to Charlie Andrus, a former chief regional Social Security judge who pleaded guilty to conspiring with Conn to retaliate against the whistleblower in the campaign defrauding the program of $550 million.

Reeves in an unrelated case allowed a former University of Kentucky employee who swindled the school out of $200,000 to avoid prison altogether with a sentence of probation, calling it “sufficient punishment.”

Yet farmer Girod, who’s harmed no one and had no criminal record when his nightmare began, languishes in a Pennsylvania prison more than 400 miles away from his home.

An appeals-court reversal or presidential pardon would go a long way toward highlighting the insufficiency of this judge’s contemptible inconsistency.

Liberty Boosters: Gov. Bevin and Frankfort’s Republican legislative leaders for planning to tackle pension and tax reforms separately.

Claims that tax reform is critical to generating revenue wrongly blame Kentucky’s public pension woes on insufficient support from taxpayers or poor returns on investments or, at the very least, station the cart before the horse.

The retirement systems’ funding levels continue to fall even though the commonwealth’s current budget poured an additional $1.2 billion into them.

Also, investment returns for the past 30 years have, on average, exceeded more than 9 percent in the Kentucky Retirement Systems and 8 percent in the Teachers’ Retirement Systems.

At the core of the pension crisis is a structural weakness rather than lack of dollars.

Stop the digging by fixing the systems’ benefit structures.

Then, looking for more dirt to fill the hole becomes an exercise in productivity rather than futility.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

News release: Bluegrass Institute Center for Open Government files complaint about House of Representatives’ secret pension meeting

BIPPS Logo_pickCOG LOGO(FRANKFORT, Ky.) — An open-meetings complaint was filed today by the Bluegrass Institute Center for Open Government in response to a closed meeting held last week by the Kentucky House of Representatives to discuss the commonwealth’s pension crisis.

The complaint notes the closed meeting “constituted a violation of KRS 61.810(1) which states that ‘[all] meetings of a quorum of the members of any public agency at which any public business is discussed or at which any action is taken by the agency, shall be public meetings, open to the public at all times.’”

None of the 13 exceptions allowing public agencies to hold a meeting of a quorum of its members behind closed doors appears valid in this situation, said Amye Bensenhaver, the open-government center’s director.

“There’s neither a general nor a specific exception to the Open Meetings Act under which discussion of pension reform falls,” Bensenhaver said.  “Even if there was, the leaders of the agency — House legislative leaders in this case — must publicly state the law and the exceptions allowing them to meet behind closed doors, which clearly didn’t occur.”

House Speaker Jeff Hoover told reporters following the session that the purpose of closing the doors was to allow lawmakers to question state budget Director John Chilton and PFM, the consultant evaluating the state’s retirement systems, “without the media there and to make it a more comfortable setting for them to ask questions.”

However, Bluegrass Institute president and CEO Jim Waters rejects such reasoning, calling it “totally unacceptable” when dealing with taxpayer funds and the public’s business.

“Taxpayers fret about a $40 billion-plus shortfall, thousands of state workers worry about their future and the entire retirement system teeters on the verge of insolvency, and the people elected to fix the problem want to do so in secret and in comfort?” Waters questioned. “Considering the commonwealth’s pension crisis is the worst in the nation and threatens funding for every other public service in Kentucky, such discussion should be the most uncomfortable this legislature ever conducts.”

Past rulings by the attorney general, which carry the force of law in Kentucky, rejected similar reasonings offered to justify previous closed-door meetings of the legislature, including two rulings in 1993 (93-OMD-63 and 93-OMD-64) in response to a proposal to discuss then-Gov. Brereton Jones’s proposed health-care reform.

The attorney general determined in those rulings that according to state law (KRS 61.805(2)(b)), the House of Representatives as a legislative body is a public agency and its meetings are subject to the Open Meetings Act.

“The legislature must hold itself to the same standard as it does other public agencies,” Waters said. “A primary purpose of Kentucky’s sunshine laws is so that citizens can see not only the final decision or vote but the discussion, debate and yes, even disagreement, that occurs along the way.”

The institute’s complaint notes that just because no vote was taken or final decision made does not alter the importance of giving citizens access to the discussion and all that occurred within it.

“The open meetings act is premised on the statement that the ‘formation of public policy is public business and shall not be conducted in secret,’” the complaint states.

Finally, the complaint notes: past attorney general rulings indicate claims that such secret meetings are permissible under the guise of being a “caucus” gathering don’t hold up.

Caucus meetings are meetings held by local, regional and state political parties to discuss policy stances, candidates and political strategies and appointees.

Language from the attorney general’s opinions in the 1993 decisions referenced above are equally applicable to the Kentucky legislature’s August 29 meeting behind closed doors: “Perhaps the meeting was originally intended to be some kind of caucus meeting but at least one of the media persons maintains that every member of the House was invited to attend the meeting regardless of party affiliation. This office does not know who specifically attended the meeting but if invitations were extended to all members, regardless of party affiliation, then, by definition, the meeting was not a caucus meeting.”

A copy of the complaint can be found here, including its recommendations that the House of Representatives’ leadership takes the following steps for “remedying this violation”:

  • Acknowledge that it violated KRS 61.810(1) in conducting a closed meeting of a quorum of its members at which public business was discussed.
  • Provide the public with a copy of any written record or audio or video recording of the closed session.
  • Issue a resolution committing to future compliance with the requirements of the open-meetings law.

For more information, please contact Amye Bensenhaver at abensenhaver@freedomkentucky.com or 502.330.1816.

Bluegrass Beacon: Pull the plug on Kentucky Wired

BluegrassBeaconLogoThe odds are good that Sen. Chris McDaniel will win the bet he made during a recent legislative hearing regarding the future of Kentucky Wired, former Gov. Steve Beshear’s statewide broadband boondoggle.

Pointing to the project’s significant delays, cost overruns, erroneous presumptions and lack of revenue streams to make bond payments coming due, McDaniel, R-Taylor Mill, said he’s “betting it’s going to be substantially cheaper” to unplug it.

The Beshear administration in 2013 ham-fisted legislators into approving the issuance of $30 million in bonding for Kentucky Wired to match the nearly $24 million in federal dollars wrested by U.S. Rep. Hal Rogers from the Appalachian Region Commission with an additional $280 million worth of bonding provided by private-sector partners for which state taxpayers also will be on the hook.

State lawmakers approved Kentucky Wired only after being convinced the 3,400-mile statewide network would be built for less than $340 million, up and running by January 2017 at the latest and – most important – connecting customers and collecting revenues needed to make its bond payments.

However, only 129 miles of fiber strand has been laid to date and yet the Kentucky Communications Network Authority (KCNA) reported to a budget review subcommittee that $175 million has already been spent with only $237 million remaining in the budget.

It could be 2020 before Kentucky Wired is online and able to even come close to making its bond payments.

Legislators across the commonwealth are displeased; some say KCNA competes with local providers.

Rep. Michael Meredith, R-Oakland, told fellow members of the Budget Review Subcommittee on General Government, Finance, Personnel and Public Retirement that local leaders in his district charge it’s “stealing customers.”

Then, there are the mounting, yet unknown, costs.

KCNA Executive Director Phillip Brown told the committee that 152 “supervening events” have led to delays in launch dates driven up costs by “tens of millions.”

Brown admits the original $324 million price tag already has ballooned to at least $413 million.

Committee member Rep. Phil Moffett, R-Louisville, who works in the broadband industry, refuted Brown’s attempt to blame delays on the time taken to reach pole-attachment agreements private providers like AT&T and Windstream.

Moffett instead called out the agency’s incompetence, saying “anybody that’s been in this business any amount of time would have known that these delays were foreseeable.”

He blasted the whole project as being built on a house of cards, saying legislators were misled by a tainted procurement process at the end of Beshear’s administration that duped lawmakers into believing that $11 million in federal money currently going to AT&T as part of a previously bid contract could be jerked away and redirected toward a government entity.

AT&T rightly threatened legal action, after which you heard nothing from Beshear’s bureaucrats about the program.

With contracts already signed, they simply left the mess for the next administration to clean up.

Moffett calls it “fraudulent” and “shameful” that buyers purchased bonds based on assurances of a non-existent $11 million revenue stream – a whopping 39 percent of the bond payments.

“We’ve been sold a bad bill of goods,” Suzanne Miles, R-Owensboro, concluded.

McDaniel spoke openly at the hearing of “not just civil, but possible criminal prosecution affiliated with the sale of these bonds.”

Without being up and running, few customers, declining revenues and mounting costs, how does the KCNA propose making the $30 million payments due on the project, which would mount to a $90 million past-due bill if three more years are needed to get the project fully off the ground?

Brown and his fellow bureaucrats likely will come begging for more General Fund dollars.

Legislators, start practicing now: “Read my lips: No new money. Shut it down.”

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

News release: Right-to-work not anti-union but pro opportunity, Warren County attorney tells SPN attendees in San Antonio

BIPPS LOGOFor Immediate Release: Friday, September 1, 2017

(SAN ANTONIO) — Warren County Attorney Amy Milliken told attendees at the 25th anniversary celebration of the State Policy Network (SPN) on Thursday that bringing right-to-work first to her local community in 2014 and then to the entire commonwealth in January wasn’t about being against unions but rather creating more opportunities, especially for young Kentuckians just entering the job market.

“In Warren County, we have Western Kentucky University – the fastest-growing university in Kentucky; we have the Gatton Academy – the number one high school in the country – and that’s all great. But graduates from these schools were leaving our county to go to Tennessee or to Indiana or to wherever they could get better job opportunities,” Milliken told the gathering at “Blue State Strategies for Local Right-to-Work,” a forum to assist supporters in non-right-to-work states find a path to the labor-freedom policy in local communities.

“This was about: What can we do to improve Warren County?” Milliken said.

SPN is a nationwide network of state-based free market think tanks committed to economic prosperity, individual liberty and limited government.

Milliken praised the contribution of the Bluegrass Institute for Public Policy Solutions, which was started in 2003 and is a 14-year member of SPN, as being critical to the efforts to bring right-to-work to Kentucky.

“I can’t say enough about the Bluegrass Institute and the work of Jim Waters and his organization in this effort; without them, right-to-work wouldn’t have happened,” she said.

Waters, who also participated in Thursday’s panel discussion, said the growth in investment in the county and now at the state level since right-to-work laws were passed is not a coincidence.

“The biggest problem in Warren County and the surrounding region now isn’t about creating new jobs but rather filling openings as southcentral Kentucky has become the fastest growing area in the commonwealth,” he said.

According to JobsEQ, there were 50,270 job openings in six different sectors – construction, healthcare, hospitality, manufacturing, professional services, transportation distribution and logistics – within a 50-mile radius of the 10-county area that forms southcentral Kentucky.

Milliken and Waters were joined on the panel by Sen. Andre Cushing, R-Maine, and Mailee Smith, staff attorney for the Illinois Policy Institute, also an SPN organization. The event was moderated by SPN senior policy adviser Trevor Bragdon.

“This truly was a ground-up, grassroots effort that combined our policy work with the legal efforts of Amy and national organizations like Protect My Check with the political efforts of local leaders like Warren County Judge-Executive Mike Buchanon, to impact not just our county and region but the entire commonwealth,” Waters said. “We worked together to find a path toward local right-to-work protections in our state; I believe such a path can be found in most states.”

Kentucky has seen a record $7 billion in new investment and the announcement of more than 6,000 new jobs since the legislature passed a statewide right-to-work law during the first week of January.

Thirteen counties passed local right-to-work ordinances before the statewide law passed.

Simpson County, which neighbors Warren County to the south and borders right-to-work Tennessee, became the second county to pass local right-to-work in the final weeks of 2014.

“Local economic development officials in Simpson County tell me they had $250 million in new investment and 800 new jobs announced just in 2016,” Waters said. “One longtime development veteran told me: ‘you can’t get a hit if you don’t get to the plate and we weren’t even getting to the plate with many companies – much less getting any hits.’”

Right-to-work laws still allow unions to organize and recruit members, but they cannot use the threat of unemployment to coerce workers to pay dues –  even at companies with a union contract.

“My granddaddy was a strong Teamster and I, along with our (Fiscal) Court, support unions in our county,” Milliken said., “We, however, think that right-to-work makes unions better; it makes union leaders work for their members and it keeps their money in the local community.”

Attendees had donated more than $12,500 to the Hurricane Harvey relief effort as of Thursday evening.

For more information, please contact the Bluegrass Institute at 859.444.5630.

 

 

 

 

 

News Release: Pension audit goes beyond the ‘politically palatable’

 

BIPPS LOGOFor Immediate Release: Tuesday, August 29, 2017

(FRANKFORT, Ky.) — The presentation of the final phase of an audit of Kentucky’s public pension plans at Monday’s meeting of the Public Pension Oversight Board confirms what the Bluegrass Institute has said all along: changes in the way benefits are awarded must occur immediately.

“For years and even decades, Frankfort has distracted citizens and taxpayers from the real problem of an imbalanced system with unsustainable, arbitrary benefits with charges of inadequate funding and insufficient returns on invested funds,” Bluegrass Institute president and CEO Jim Waters said today in a statement responding to the much-anticipated release of the final phase of PFM’s audit.

“Any responsible evaluation of funding and returns must acknowledge that funding has been far beyond expectations and investment returns have been healthy and exceeded assumed rates in many of the past 30 years, which is the only proper way to view these issues in a defined benefit pension system like Kentucky’s,” Waters said.

He commended Gov. Matt Bevin and legislative leaders for being willing to open the door to a serious discussion about retirement benefits, which often has been considered the third rail of politics.

“It appears that with today’s presentation, we at least are moving beyond a limited view of what’s simply politically palatable in discussions about the commonwealth’s pension crisis – arguably the nation’s most severe – toward meaningful changes that consider how the state can provide benefits to its workers without threatening Kentucky’s entire economy,” Waters said.

The Bluegrass Institute Pension Reform Team has been presenting “Sound Solutions for Kentucky’s Pension Crisis,” its description of – and solution to – this fiscal nightmare to groups and policymakers statewide.

While the Bluegrass Institute will review PFM’s recommendations in the days ahead, rest assured that big-government types will try and take advantage of this opportunity to target hard-working Kentuckians with tax increases while fighting any proposal for change.

“The status quo is simply unacceptable, unsustainable and unfair to future generations of Kentucky who will bear the brunt of debt and lack of opportunity if we fail to reform the structure of benefits and start to make real progress in reducing our unfunded liability,” Waters said.

The Bluegrass Institute stands ready to work with any and all policymakers who want to bring substantial and meaningful reform to Kentucky’s pension system.

For more information or comment, please contact Jim Waters at jwaters@freedomkentucky.com859.444.5630 ext. 102 (office) or 270.320.4376 (cell).

 

 

News Release: ‘Reform SBDM, restore chain-of-command in schools,” BIPPS CEO urges committee

 

BIPPS LOGOFor Immediate Release: Monday, August 28, 2017

(WILLIAMSBURG, Ky.) — Bluegrass Institute president and CEO Jim Waters urged the Interim Joint Committee on Education to return balance to the process governing Kentucky’s public schools by reexamining the scope, authority and impact of School-Based Decision Making (SBDM) councils.

The SBDM policy, implemented as part of the Kentucky Education Reform Act in 1990, has, in its current form, failed to demonstrably meet its mandate of improving student achievement in schools statewide, Waters told the committee in a hearing on Monday at the University of the Cumberlands in Williamsburg.

“Considering this approach toward school governance is more than 20 years old and yet federal tests indicate that fewer than three out of 10 Kentucky eighth-graders do mathematics at a proficient level, where’s the evidence that the SBDM model in most schools statewide fulfills the mission envisioned for it by KERA of creating an environment where students achieve at high levels?” he asked in prepared comments taken from this testimony submitted to the committee.

Waters also remarked on the lack of demonstrable impact these councils have had in turning around persistently failing schools, now known as “Priority Schools, noting:

  • Of the 47 schools now in “Priority” status, 31 lost their site-based council authority somewhere during the “Priority” process; only two have gotten their SBDM authority back.
  • While nine of the remaining schools currently are eligible to get SBDM authority back this fall – depending on their academic performance during the 2016-17 school year – it’s revealing that each one had actually exit-ed “Priority” status in October 2015 yet did not have their site-based authority restored at that time.

“Were these schools given a ‘Get Out of Priority Status’ card too soon – before they re-established the ability to govern themselves?” Waters wondered. “Or, do those conducting the management audits of these schools and determining their status believe the councils themselves hindered needed reform?”

He pointed to the situation at Maupin Elementary, which, while being one of the first two “Schools of Innovation” in the Jefferson County District’s “District of Innovation” program, was a place “where the council and even the principal were unable to maintain control and keep a focus on the curriculum and many other important areas of school governance.”

The chaos in the curriculum in different classrooms shows the council failed in these major areas of responsibility,” Waters said.

Along with the need for updated research on how SBDMs function in Kentucky schools –no known significant study has been conducted since 2001 – Waters said policymakers need to question whether the KERA-mandated makeup of the councils, consisting of the principal, three teachers and two parents, is good for either teachers’ workload or parental involvement.

“Do teachers really have adequate time and training to satisfy all of the council demands and responsibilities while teaching a full class load?” Waters asked. “The six hours of training required for new school-based council members hardly seem adequate to prepare them to make informed decisions regarding finances, much less guide complex curriculum options, which are becoming more intense as digital learning programs replace traditional classroom approaches.”

He stressed that reforming the scope and authority of SBDMs is not an anti-teacher proposal. Rather, he said, it’s about recognizing important roles other stakeholders play.

“We believe a reestablishment of a clear chain-of-command within each district and school would result in schools where teachers are focused on teaching, kids on learning, principals on leading schools, superintendents on leading districts and school-board members on being accountable to the citizens in their communities who chose them for this oversight duty,” he said.

For more information, please contact Bluegrass Institute Staff Education Analyst Richard G. Innes at dinnes@freedomkentucky.com or 859.466.8198. 

 

 

Quote of the day: ‘Fighting the influence of Groupthink’

“To cultivate an opinion with a strong foundation, look at contrasting sources. Assess and analyze the portions of opposing arguments that both match and dispute any preconceived notion you already accept. Understanding a topic from multiple perspectives is the only effective way to comprehend its entirety.  … If an opinion is constructed with considerable judgment, it will be able to withstand attempts at refutation. Once you’ve gotten inside the heads of the opposition, you will have the tools to create a viable argument worthy of contest.” Nicole Leonard, Western Kentucky University’s College Heights Herald 

Bluegrass Institute News Release: Center for Open Government scores victory in JCPS open meetings appeal

 

BIPPS LOGOFor Immediate Release: Wednesday, August 16, 2017COG2

(FRANKFORT, Ky.) — The Kentucky Attorney General has ruled in favor of the Bluegrass Institute and its Center for Open Government in an open meetings appeal involving the Jefferson County Board of Education.

Assistant Attorney General James Herrick in a decision released Monday agreed with the Bluegrass Institute that a meeting conducted by the JCPS board on Sunday, April 30, in private law offices on the 28th floor of a downtown Louisville building violated the legal requirement that public agencies conduct their meetings “at specified times and places convenient to the public.”

The meeting was held to discuss applicants for the school district’s then-vacant interim superintendent’s position.

Herrick rejected the district’s claim that the meeting site was chosen to avoid inconvenience to JCPS staff and “conserve the considerable costs associated with opening the VanHoose Education Center on a weekend.”

The VanHoose building at 3332 Newberg Road serves as the district’s central office where the board normally convenes.

Relying on past open meetings decisions, Herrick ruled that “[a] public meeting must be held in ‘a place from which no part of the citizens . . . may be excluded by reason of not feeling they may freely attend.”

Based on previous decisions and “common experience as well as the specific experience of” Bluegrass Institute representatives who were unsuccessful in their attempts to gain entry to the 28th floor of the building at 500 West Jefferson Street on a subsequent Sunday afternoon, Herrick concluded that “it [is] reasonable to suppose that an ordinary member of the public might have been discouraged from trying to attend a meeting.”

Center for Open Government Director Amye Bensenhaver praised not only the decision but Herrick’s reasoning.

“Our goal in bringing this appeal was to establish that meetings of public agencies must always be conducted at times and places convenient to the public – even if it causes inconvenience to the public agency,” Bensenhaver said. “Regardless of whether the agency believes the issue to be discussed worthy of public interest, it’s required to conduct meetings at locations from which no member of the public may feel excluded.”

It’s not as if a “suitable public building was unavailable,” Herrick wrote, noting the availability of appropriate meeting rooms at the district’s “approximately 174 schools” in addition to the VanHoose facility.

“With such a selection of locations available in public buildings, we cannot reasonably find it ‘convenient to the public’ to hold a public meeting in a private law office on the 28th floor of a privately-owned building, based solely on unspecified ‘costs’ of opening the VanHoose building on a Sunday,” he concluded.

Bensenhaver noted that past court rulings establish clearly that “an agency’s failure to comply with the strict letter of the law in conducting its meetings ‘violates the public good.’ We intend to hold public agencies to the strict letter of the open meetings law.”

If not appealed to circuit court within 30 days, an open meetings decision issued by the Kentucky attorney general has the force and effect of law.

For more information, please contact Amye Bensenhaver at abensenhaver@freedomkentucky.com or 502.330.1816.

 

Kentucky’s pension crisis: The wrong question

20111129beacon2Editor’s note: The Bluegrass Beacon column is a weekly syndicated statewide newspaper column posted on the Bluegrass Institute website after being released to and published by newspapers statewide.

It’s apparent from KET’s Kentucky Tonight forum on the public-pension crisis last night and legislators’ comments about the issue in Sunday’s Madisonville Messenger that substantially addressing the systems’ combined $40 billion shortfall will require overcoming hurdles related a general lack of knowledge about how defined benefit pension systems work and the lack of resolve to address future benefit accrual rates for current beneficiaries.

Unfortunately, Kentucky’s pension beneficiaries have been misled to believe that the highest benefit they receive for any year of service applies to any and every year they work. However, the level of benefits in a defined benefit system like Kentucky’s are established annually based on assumptions made by the actuaries for each year.

These actuarial assumptions – including investment returns, payroll growth, inflation, longevity, retirement age and attrition rates – are considered annually to both determine the level of benefits for that year and to create the reserve needed to ensure the funds are available to award that year’s benefit to beneficiaries when they retire. (The actual amount of beneficiaries’ pension checks are determined by adding the benefit factor – the percentage of final average salary each year – usually between 1.5 percent and 3 percent – for all years of service.)

Benefits in such a system are synchronized and therefore must, in a properly run defined benefit system, fluctuate according to what the system can properly pre-fund – a determination made by the actuarial assumptions.

The problem here is that the benefits in Kentucky’s retirement plans have always increased but never decreased, which is not the way a defined benefit pension system works but it is the way you can create huge shortfalls.

So, the wrong question here is: Are you going to cut future pension benefits for current employees?

It’s the wrong question because no future benefits have yet been established since, in a defined-benefit system like Kentucky’s, the level of benefits are determined annually based on each year’s assumptions.

The right question is: If a defined benefit system like Kentucky’s is designed to avoid unfunded liabilities, why do we have a $40 billion unfunded liability and what must we do about it?

Glad you asked!

We must first stop the digging, which involves understanding how this liability was created and avoiding such practices in the future.

Quite simply, the liability in each of Kentucky’s major retirement plans exists because after the actuaries determined what the annual benefit levels should be – and after an actuarial reserve was created to ensure benefits would be funded at those levels – some politician in some future year decided to increase the benefit and apply those increases to previous years.

This disrupted the actuarial reserve already created for those previous years to ensure funding for benefits at the proper, actuarially determined level would be adequate and available. Such retroactive benefit enhancements are why the County Employees Retirement System (CERS), which has always paid 100 percent of their actuarially required contribution (ARC) is only 60 percent funded.

Putting the system back on track by ending the practice of both retroactive (past) and prospective (future) benefit enhancements and ensuring that benefits are properly awarded and not spiked in future years is not “cutting” benefits, even if the actuarially determined benefit winds up being lower because of actuarial assumptions.

Rather, it’s the responsible thing to do – if we want to have sustainable retirement systems, something I’m sure the beneficiaries might be interested in, as well. Once these benefit structures are addressed, then we can begin to find additional dollars and begin filling in Kentucky’s pension hole.

Legislative action related to the benefit structures of the systems in recent years has amounted primarily to some adjustments for new hires even though nervous policymakers desperate to be seen as doing something about the problem but not wanting to upset the apple cart have spun these meek moves as major reforms.

They certainly have done little to address Kentucky’s second-worst-in-the-nation unfunded pension liability. Meanwhile, the funding levels of the systems continue to drop toward insolvency.

If Frankfort takes the meek approach again and fails to address the benefit accrual rates of the state’s pension system, it will have failed to learn from history and will put the commonwealth’s entire pension system in peril.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Beacon: The soft bigotry of Blaine’s expectations

BluegrassBeaconLogoThe Supreme Court’s recent ruling that Missouri wrongly used its constitution’s Blaine Amendment to deny a publicly funded grant to a church-run preschool won’t directly affect growing efforts to add Kentucky to the list of states offering private school-choice programs in the form of tuition assistance via tax credits.

Tax-credit proposals like ones introduced in the Kentucky legislature in recent years have a perfect record in courts because they involve using voluntary private donations to create scholarships giving families the means to provide children with the best education possible.

Vouchers are more controversial because they allow families access to tax dollars for private, often religious, education.

Still, the high court’s ruling in Trinity Lutheran v. Comer signals a distinct weakening of support nationwide for school-choice opponents who would deny families a voucher simply because they might use funds to send their children to a religious school.

Trinity Lutheran Preschool of Columbia, Missouri, was denied access to a state grant for nonprofits to take advantage of a program recycling old tires as new playground surfaces.

Show-Me jurists pointed to their state constitution’s “Blaine Amendment,” which includes a prohibition that “no money shall ever be taken from the public treasury, directly or indirectly, in aid of any church, sect or denomination of religion.”

Kentucky’s constitution contains similar but even stronger language in Section 189: “No portion of any fund or tax now existing, or that may hereafter be raised or levied for educational purposes, shall be appropriated to, or used by, or in aid of, any church, sectarian or denominational school.”

Such language first found its way into state constitutions after Sen. James G. Blaine of Maine failed to get a similar federal constitutional amendment through Congress nearly 150 years ago.

On the surface, these amendments were billed as solidifying the wall of separation between church and state.

Underneath, however, anti-Catholic sentiments boiled over.

Catholics began seeking public funding for their own schools because they didn’t want to send their children to the public schools of that day because, while they were called “nondenominational,” really were Protestant-oriented schools – complete with hymn singing and King James Bible readings.

Powerful politicians would not hear of it.

Civil War hero and President Ulysses S. Grant gave a highly publicized speech urging Congress to adopt a constitutional amendment to prohibit funding of so-called “sectarian schools.”

Supreme Court Justice Clarence Thomas more recently wrote for the majority in the Mitchell v. Helms decision in 2000 allowing religious schools access to federal loans that it was an “open secret” that “sectarian” in the language of Blaine was code for “Catholic.”

Ironically, the very amendment favored by Protestants long ago is now used against them by school-choice opponents who loathe religious institutions, especially private Christian schools.

Hiding behind the cloak of wanting to strengthen that separating wall, most school-choice enemies – led by teachers’ unions – insist they employ Blaine to protect minorities and individual rights.

Yet they continue to use this ancient amendment, which Thomas in the Mitchell ruling claimed was “born of bigotry,” to deny students living in the wrong zip code with two strikes already against them in life the opportunity to rise above “the soft bigotry of low expectations” – as one of Grant’s White House successors stated.

Kentucky’s policymakers and jurists must rise above primitive attempts to use Blaine as a weapon against giving families in this commonwealth the opportunity to provide their children the best education possible – regardless of the size of their paychecks or whether they choose a public, private or parochial school.

Trinity and other soon-to-be-decided rulings are opening the door for more school choice wider than it’s been in more than a century.

It’s time for Kentucky to step through it.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.