In the media: Coverage of Bluegrass Institute’s open-meetings win

Amye Bensenhaver, director of the Bluegrass Institute Center for Open Government, speaking tonight in E’town on Kentucky’s sunshine laws

BIPPS Logo_pickCOG LOGOCheck here for outstanding coverage by Lexington Herald-Leader reporter John Cheves regarding the Kentucky Attorney General Office’s decision to side with the Bluegrass Institute Center for Open Government’s claim that the House of Representatives cannot close its doors and hide behind claims that a secret discussion about pension reform is somehow justified because leaders called it a caucus meeting and because it would allow politicians to be more “comfortable” while discussing the biggest threat to the commonwealth’s economic stability.

Center director Amye Bensenhaver, a Bluegrass Institute Liberty Award winner, will speak on “Kentucky’s Sunshine Laws: What They Are and What They Should Be” at the Central Kentucky Tea Party meeting tonight at 7 pm at the Nolin RECC, 411 Ring Road in Elizabethtown.

Bensenhaver, who served as assistant attorney general for 25 years, wrote around 2,000 open records and open meetings opinions and is a foremost expert on Kentucky’s Sunshine Laws.

The public is invited. There is no charge.

News Release: AG supports Center for Open Government’s claim that House’s secret meeting violated Open Meetings Act

BIPPS Logo_pickCOG LOGOFor Immediate Release: November 6, 2017

(FRANKFORT, Ky.) — The Kentucky Office of the Attorney General in response to a complaint filed by the Bluegrass Institute Center for Open Government has ruled that the House of Representatives violated the Open Meetings Act when it met “with a quorum present” behind closed doors to discuss a consultant’s controversial recommendations for addressing the commonwealth’s public-pension crisis.

Former House Speaker Jeff Hoover argued in his response to the Center’s complaint that the gathering was not subject to the Open Meetings Act since it was held by the Majority Caucus but was also open to the Minority Caucus, and that both caucuses are exempt from the law.

Closed-caucus meetings are held in separate locations by the respective political parties’ legislators in the House and Senate during General Assembly sessions to choose leaders and plan the flow and strategy of legislation.

However, the Center for Open Government in its complaint noted the gathering was not a permissible closed-caucus meeting since a quorum of all House members were present.

“The presence of members of the minority party at a meeting of the Majority Caucus is factually antithetical to Speaker Hoover’s characterization of that meeting as a majority caucus meeting,” the complaint stated.

Center for Open Government Director Amye Bensenhaver praised the Attorney General’s office for its ruling.

“Our purpose in bringing this legal challenge was to ensure that House members were held to the same standard of accountability they have required of all other state and local agencies since the Open Meetings Law was passed,” Bensenhaver said. “The attorney general’s decision secures the public’s rights under the act and confirms that the act must be applied even-handedly to those at every level of government.”

The decision listed as 17-OMD-228 was written by Assistant Attorney General Matt James, who quotes from a previous decision involving similar complaints by noting the fact that state law differentiates between standing legislative committees and all other committees when it comes to open-meetings requirements.

In that decision, which involved a closed meeting by the House to consider health-care reform, the Attorney General’s office noted: “If the House of Representatives was, generally, excluded from the coverage of the Open Meetings act, then the law would not make a distinction as to what kinds of House Committees are excluded from the provisions of the Act.”

House leaders will have 30 days to appeal or discuss with the Bluegrass Institute Center for Open Government the following proposed remedies, including that the House leadership should:

• Acknowledge it violated the statute requiring the challenged meeting be open to the public.

• Release to the public any written record or audio or video recording of the closed meeting.

• Issue a resolution committing to future compliance with the requirements of the Open Meetings Act.
Hoover claims the meeting on Aug. 29 – the day following the release of PFM Consulting’s contentious recommendations calling for cutting retirees’ cost-of-living benefits and freezing benefits for current public workers and moving them into a 401(k)-style plan – allowed lawmakers to question the consultant and state budget Director John Chilton “without the media there and to make it a more comfortable setting for them to ask questions.”

“Comfort and convenience cannot be the determinants in whether transparency laws are followed,” Bluegrass Institute president and CEO Jim Waters said. “These laws exist to ensure that the formation of public policy – the discussion, debate and disagreement of proposed reforms – is just as much a part of the public’s business as the final vote tallies on bills.”

James also rejected Hoover’s claim that applying the Open Meetings Act to such gatherings “would violate separation of powers,” noting the legislature hasn’t exempted itself and has specifically directed the attorney general to issue decisions on these disputes.

Waters said the ruling rightly rejects claims the public can be denied access to this assembly involving an overwhelming quorum of the entire House of Representatives concerning the most significant threat to Kentucky’s future economic security and well-being “because this was just a big political caucus meeting.”

“To support such an approach would allow – perhaps even encourage – the entire House to close its doors to any meeting involving difficult discussions,” Waters said.

For more information, contact Amye Bensenhaver at abensenhaver@freedomkentucky.com or 502.330.1816 (cell).

Bluegrass Institute Statement: Proposed pension plan doesn’t go far enough

BIPPS Logo_pickThe Bluegrass Institute for Public Policy Solutions for years has warned that failing to implement real reforms to Kentucky’s ailing retirement systems could threaten the commonwealth’s entire economy and crowd out funding for other important government services.

This is now happening.

Our commonwealth faces a $200 million budget deficit and Gov. Bevin has been forced to ask most state agencies to slash their budgets by 17 percent. Keep in mind that these cuts are occurring during a budget biennium in which an additional $1.2 billion was put into the public-pension pot to shore up the retirement systems, and $2 billion will be spent from the General Fund on the retirement systems during the current fiscal year alone.

Also, independent consultants hired by the state to make recommendations for addressing the pension crisis indicate that an additional $700 million will be needed each year – an additional $1.4 billion during each two-year budget cycle – to keep Kentucky’s retirement systems from becoming insolvent. This would result in nearly $3 billion of the General Fund’s annual $11 billion portion going toward funding retirement benefits for public workers.

The commitment to fix this problem crosses all geographical, ideological and political boundaries.

Whether you’re a taxpayer living in Pikeville or Paducah or your concern is the state’s credit rating or the availability of adequate funding for education, transportation and public safety, you should be very concerned about the fact that Kentucky’s unfunded pension liability threatens to drive up taxes, harm the state’s economy and crowd out funding for most other government services, including education, transportation, public safety and health care.

While a proposal recently introduced by Gov. Matt Bevin and legislative leaders attempts to address the pension crisis in a politically palatable way, it does not go far enough in dealing with the structural imbalance of the retirement systems’ benefit structure that has played a critical role in creating the $60 billion-plus unfunded liability.

For example, the plan fails to recognize how increasing benefits and applying those benefit enhancements retroactively disrupted the annual horizontal actuarial reserves established to ensure that benefits are properly prefunded, which led to the current unfunded liabilities that will, without meaningful reforms, drown Kentucky’s entire economy.

By implementing a soft freeze, which changes the benefit structure for new hires into the system while allowing benefits to continue to accrue at current rates for current employees until they reach 27 years of service, the recent proposal, if enacted as is, would result in the state’s unfunded-liability hole continuing to grow deeper.

The Bluegrass Institute has and will continue to advocate for a hard freeze for current beneficiaries, which would end the current unsustainable plan immediately. This approach would allow beneficiaries to receive all they have earned to that point but would also create a new defined-benefit paradigm that’s sustainable due to reset benefit factors, accrual rates and consistent levels of contribution by beneficiaries and their employees. The alternative to a sustainable, actuarially sound defined-benefit pension system that does not increase liabilities – and guards against such increases in the future – is a strict defined-contribution plan.

Other aspects of the current proposal by Bevin and legislative leaders offer reasons for concern, including placing in a defined-contribution, 401k-style plan all new teachers who, in Kentucky, are not enrolled in the federal Social Security plan. However, it’s important to note that the current proposal offered by Bevin simply acquiesces to teachers and their political and union representatives who strongly oppose placing new hires in the Social Security system.

While the Bluegrass Institute does not philosophically oppose defined-contribution plans, we offer an alternative defined-benefit plan that avoids the hard fall and hard sell of a 401k-style plan, addresses the egregious and costly abuses in the current out-of-control retirement systems and ensures a quality benefit for state workers.

For more information, please contact Jim Waters at jwaters@freedomkentucky.com, 859.444.5630 (office) or 270.320.4376 (cell).

On the air: Bluegrass Institute Pension Reform Team director on ‘Kentucky Tonight’…tonight!

Kyresized BIPRT Bill Smith

Join Bluegrass Institute Pension Reform Team director Dr. William Smith on KET’s Kentucky Tonight at 8 p.m. … tonight!

Smith joins host Renee Shaw and a panel of guests discussing Frankfort’s latest proposal to fix Kentucky’s worst-in-the-nation pension crisis.

Also appearing will be Stephanie Winkler, president of the Kentucky Education Association; Dave Adkisson, president and chief executive officer of the Kentucky Chamber of Commerce; and Jason Bailey, director of the Kentucky Center for Economic Policy.

Watch the hour-long show live on KET and at www.ket.org/live.

Viewers with questions and comments may send e-mail to kytonight@ket.org or use the message form at www.ket.org/kytonight. Viewers may also submit questions and comments on Twitter @KyTonightKET. All messages should include first and last name and town or county.

Plan to call in during the program with your comments and questions at 1-800-494-7605.

Kentucky Tonight programs are archived online, made available via podcast, and rebroadcast on KET, KET KY, and radio.

Help the Bluegrass Institute for Public Policy Solutions continue to advance freedom and prosperity by promoting free‐market capitalism, smaller government, and the defense of personal liberties. Join us!

 

Bluegrass Beacon: End mooching off taxpayers for sports stadiums

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 recent column has been updated to reflect the misguided 23-2 vote by the Louisville Metro Council for this public-private nonsense.

National Anthem protests and disrespect of the flag by NFL players isn’t only revealing the ungratefulness of coddled pro athletes for the sacrifice made by multitudes for our freedoms, it’s also exposing Americans to a type of crony capitalism – collusion between big business and big government – that for too long has flown under most of their radars.

While there have been attempts in the past to deal with the intermingling of “big sports” we’ll call it and big government – including proposals during even the Obama administration to prohibit use of tax-exempt bonds for stadium construction – they can’t get passed because too many congressmen are unwilling to lose their perks, including those free season tickets for family and friends.

Meanwhile, taxpayers are forced to finance stadiums for owners, players and teams that earn multi-millions, even billions, of dollars yet that offer games or concerts with ticket prices so high many of those taxpayers themselves cannot afford to take their families to the very venues they’re coerced into funding.

The most egregious subsidy sins are committed when federal dollars are used to fund professional sports stadiums, 36 of which have been built during the past 17 years at a cost placed by a Brookings Institution study at more than $3 billion.

How many Montana taxpayers will ever step foot into Paul Brown Stadium, where eight football games by the NFL’s Cincinnati Bengals are played each year, the construction of which soaked up $164 million worth of federal taxpayer money via municipal bonds?

How many Kentucky taxpayers will ever cuss out an umpire in Yankee Stadium, built in 2009 at a cost of $2.5 billion, $431 of which million came in the form of federal tax subsidies?

Yet another attempt to end such subsidies in the form of bipartisan legislation proposed earlier this summer in Washington is picking up speed while heading down the sideline toward the end zone.

It would be sweet to this columnist if now is the time we say collectively as a nation to these pampered players and to those teams whose mooching owners also are taking a knee: “You have a constitutional right to kneel during the anthem and shake a fist at our flag, but you’ll no longer do it on our dime.”

In fact, anyone who supports a free-market approach centered on a vibrant private sector leading the way toward economic prosperity – a system which made ours the most prosperous nation in history – won’t develop a stadium-building plan centered on pilfering taxpayers.

They won’t want to fork over $30 million for a facility in which a grand total of 16 regular-season minor league soccer matches will be played each year as the Louisville Metro Council – coerced by Mayor Greg Fischer – recently supported doing by a 23-2 vote.

They won’t try to mask the awfulness of such a proposal by offering unproven claims that such a facility will attract investment, create jobs and spur economic growth.

Many such tired and worn-out claims have been made during the recent soccer-stadium debate in Derby City.

They won’t claim that such mooching is okay in the case of the planned stadium near downtown Louisville because it’s part of a $200 million development that includes a retail, office and hotel complex.

We’ve heard lots of that, too, from developers and folks eager to support projects backed by taxpayers.

The Brookings report states that studies “consistently find no discernible positive relationship between sports facility construction and economic development, income growth, or job creation.”

Louisville patent attorney Theresa Camoriano writing in the online Jefferson Review asserts that nothing proposed by Fischer and his fellow stadium enthusiasts supports the case for public funding.

“Either they are a good financial risk, in which case investors will voluntarily invest in them, or they are not, in which case taxpayers should not be forced to subsidize them involuntarily,” Camoriano writes.

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.

Fixing pension problem requires all hands — including those of beneficiaries — on deck to insure ‘this never happens again’

Bluegrass Institute Pension Reform Team and board member Aaron Ammerman pointed out in his letter in today’s Lexington Herald-Leader:

“Paying off the unfunded liability and honoring benefits that have already been earned by state workers will be an extraordinary effort, considering funding also needs to be found for essential state services such as education, health care and infrastructure.”

The Bluegrass Institute has warned for years that the day would come when tough choices necessary to address the worst-in-the-nation pension crisis would threaten to crowd out funding for many government services that most Kentuckians would consider essential.

That day has arrived. To make matters worse, as Ammerman notes:

“To this point, state employees have resisted even the slightest adjustment to future unearned pension benefits, even though past benefits have been guaranteed at great cost.”

Ironically, many of the same voices calling for a hefty increase in taxes to address the commonwealth’s pension crisis also are the staunchest opponents to, as Ammerman puts it, “accepting reasonable changes to future benefits and installing safeguards so that this never happens again.”

 

Bluegrass Beacon: Pension plan cools, but freeze still needed

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

While waiting this past summer for the release of a consulting group’s recommendations on addressing Kentucky’s worst-in-the-nation public-pension crisis, the question arose in this column: Will there be a pension freeze?

That previous column asserted: “the only way Kentucky will survive this fiscal storm is by freezing benefit-accrual rates for all members of every system, and resetting the pension plans” so that in the future “benefits are awarded based on their relationship with investment returns and payroll contributions rather than the warm, but deceptive, weather of political palatability.”

The answer has been delivered in the Bevin administration’s proposal: there’s not a freeze but things are cooling down a bit, but at the rate of a worn-out air conditioner in an old car on a blistering hot day.

Still, get up close and there could be some measure of relief, depending, of course, on what cuts from this latest pension proposal get left on the legislature’s floor.

The plan proposes ending the defined-benefits plan for all current and future legislators, putting them into a 401k-style plan, just as new employees in all plans will be offered beginning on July 1, 2018.

While Frankfort’s politicians have been falling all over themselves to make sure retirees know they won’t lose benefits already granted, they’ve also been acutely aware of the ongoing unpopularity of their own gold rush-like pension plan and agreed to take steps to claw back grossly lavish benefits handed out to retired lawmakers.

“Existing defined benefit members and current retirees will have their benefit calculation based on their legislative salary,” said the document handed out Wednesday.

Does this mean that former big-spending Democratic House budget chairman Harry Moberly will be forced to give up a substantial portion of his $154,912 public pension?

Let’s hope so.

Moberly’s pension was greatly padded thanks to legislation passed in 2005 allowing part-time lawmakers to apply their three highest years of salary in another plum government position to the retirement checks they draw on the legislative pension system.

If Moberly and other self-serving political retirees want to fight that claw-back provision in court, I’m getting my reservation in now for a front-row seat in a Frankfort courtroom.

I can hardly wait to hear them defend keeping their extravagant benefits, which are based on their own personal votes for bills creating such opulence.

Bring it on, Harry.

The new pension proposal also takes a small step toward getting the cost of health-care benefits under control by requiring all employees to contribute an additional 3 percent of their salaries toward retiree health care benefits.

However, a full blast of cool requires replacing one of the main elements of this plan, which still allows beneficiaries in the systems to “continue to accrue full unreduced retirement eligibility” until they reach 27 years of service.

But who in their right mind would agree to any pension plan that adds more unfunded liabilities to Kentucky’s worst-in-the-nation pension crisis, which has been pegged with being as deep as $85 billion in the hole?

This is where I barely feel any cold air.

At the very least, we must reset the system for current beneficiaries, recalibrating pension-benefit factors based on actuarially sound assumptions, not just what they were last year.

We’re facing the stark possibility that Frankfort will need to find an additional $2 billion in future budgets to effectively address the liability.

Where will this money come from?

Before taxpayers let Frankfort anywhere near our wallets and purses, there must be a breaking of the silence concerning how irresponsible retroactive benefit enhancements in the past and promises of future such enrichments have been a primary contributor to Kentucky’s unfunded pension liabilities.

By refusing to acknowledge that failure, the new proposal neglects to include safeguards to ensure Kentucky’s dark pension history doesn’t repeat itself.

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: Taxpayers deserve at least honorable mention in pension debate

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

Maybe it’s because I’ve been speaking to Rotarians recently, but I’m thinking stakeholders in Kentucky’s pension fiasco could do a lot worse than adapting and applying Rotary’s Four-Way Test to this crisis: Is it the truth? Is it fair to all concerned? Will it build goodwill and better friendships? Will it be beneficial to all concerned?

While perusing a copy of the Kentucky Retirement Systems (KRS) 2016 Summary Annual Financial Report – Dave Eager, the KRS’s cordial interim executive director, handed me my own bright shiny copy – it became apparent to me that, considering the current tone and emphasis, the proper place to begin the next phase of the debate is at the far end of that gauntlet of goodwill.

Will the reforms finally accepted be beneficial to all concerned?

Dialogue around Frankfort’s political water cooler these days focuses primarily on two of the stakeholders – beneficiaries and politicians – and two major questions:

  • Can Republicans, who control the legislature and governor’s office, get solid-enough agreement among their caucuses, allowing them to come to the Capitol for a special session and pass effective pension-reform legislation in a judicious and timely manner?
  • Will benefits be reduced?

If, however, we’re going to implement reforms “beneficial to all concerned,” shouldn’t the largest stakeholder group of all – taxpayers – receive at least honorable mention in these discussions?

An abundant supply of political hyperventilating to pacify and reassure retiree and beneficiary groups and their talking heads is on full display while a much-larger stakeholder group is in danger of being denied even a place at that water cooler.

Yet while the 364,710 KRS members may form a significant voting bloc, what sincere consideration will be granted in whatever KRS reforms finally get passed to the 1.25 million Kentucky taxpayers, who, reports another glossy publication from Truth in Accounting, each carry a $39,000 burden of debt for the commonwealth’s unpaid bills, including its worst-in-the-nation public-pension liability?

The KRS publication offers a curious take on how it believes taxpayers benefit from this underwater retirement system.

Quoting a national group’s numbers, it claims – apparently with a collective straight face on the part of its authors – that each dollar of the $1.9 billion paid to its recipients in 2016 “supported $1.43 in total economic activity in Kentucky.”

Really?

Are we hardworking schmucks in the private sector missing out?

Should we be sending our entire paychecks and savings to KRS to experience this amazing investment phenomenon for ourselves?

It would be safer to hide our money under the mattress, considering KRS’s report goes on to claim incredulously that “in an unsteady economy, the consistent addition of pension funds into the economy is a stabilizing element.”

What if Bernie Madoff made such claims about an underwater business?

Why, he’d be in jail. Oh yeah, that’s right – he is!

This KRS document’s rocket-like spin ignores the fact that just about everyone else – including credit-rating agencies – deems the commonwealth’s pension liability, which is between $38 billion and $85 billion, the primary contributor to that “unsteady economy.”

Neither does it bother to include anything about how the dramatic decline in the systems’ funding levels – including the drop from more than 130 percent funded in 2000 to barely 13 percent currently – was caused not by taxpayers’ stinginess but by the arbitrary, retroactive and irresponsible awarding of benefit enhancements during a period spanning several decades.

As politicians increasingly pound the bully pulpit, sermonizing about how “we have a moral obligation to keep our commitments to those in the system,” we should demand they follow that up with statements about the immorality of government taking more from taxpayers, who, I remind, form the largest of the stakeholder groups.

It’s their hard work, investment and sacrifice that form the foundation of this commonwealth’s economy and future.

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: Merit pay for teachers merits consideration

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.

Hardin County Schools Superintendent Teresa Morgan at a recent town hall on public pensions bemoaned the fact that interest in vacant teaching positions has dropped in recent years from as many as 100 applicants per opening to as few as 10, with some openings in math and science fields nearly impossible to fill.

Her recruiting pitch is, “We can’t say ‘you will make $150,000,’ but we can say we will pay you a living-wage salary and a pension that you will be proud of – one that you have earned and deserve.”

But touting retirement benefits are an awkward way to recruit and retain teachers.

Instead, why shouldn’t Morgan be able to offer a starting physics teacher a higher salary than, say, a new physical education instructor?

While Morgan is eager to defend extremely generous pension packages, she and her fellow Kentucky superintendents should also acknowledge the consequences of using a one-size-fits-all salary schedule as the primary mechanism for hiring teachers.

This approach shoehorns decisions about teachers’ salaries into only considering numbers, not types, of degrees earned and years of experience.

There aren’t nearly enough incentives to attract candidates for scarce skill areas.

A merit-pay policy could help.

Vanderbilt University recently released a new study claiming merit programs are more likely to accomplish what single-salary schedules based on simply having an extra degree and two decades in a classroom cannot: attract and retain high flyers to subjects where a shortfall exists and motivate current teachers in every area to improve, all of which positively impacts students’ academic opportunities and achievement.

The study found a “statistically significant positive association between teacher merit pay programs and student test scores,” amounting to four additional weeks of learning.

Pop quiz: Quick, name a pension benefit or sick-day policy that’s added an entire month’s worth of learning to a student’s academic experience?

Common sense and the experience of other professions dictate the truth that too many teachers-union leaders and bureaucrats spurn: retaining high performers – especially those willing to accept harder-to-fill positions – requires recognizing some teachers simply perform better and contribute more to our children’s education.

“Nothing demotivates a high performer faster than knowing that the employees who have contributed much less in the organization, have received the same pay increase or bonus,” Susan M. Heathfield writes on The Balance while examining “The Advantages and Disadvantages of Merit Pay.”

Heathfield writes about how merit pay affects professions in general, but it applies to teaching at least as much.

Where are the stakes higher than when we’re preparing future generations to lead this country and commonwealth?

Union leaders and sympathizers will generally circle the wagons faster than John Wayne when the discussion gets serious about merit-pay approaches that require evaluating teachers on a set of performance-related factors.

But they also have some legitimate concerns that must be addressed for a merit-pay system to work in Kentucky.

For example, including test scores in the evaluation process requires having a valid, reliable testing system that assesses students in the fall when they enter a new grade and then again in the spring – with results being available in a much-timelier manner than currently happens – to show the teacher’s value and impact upon her classroom.

This allows a teacher assigned a group of struggling, disadvantaged students from low-income homes in the inner city an opportunity to reap rewards for improvement she brings to those in her class between August and June rather than basing the merit of her work on how she stacks up against teachers in a suburban school with kids from wealthier homes and lots of advantages.

Merit pay would offer Kentucky a chance to build a reputation of attracting the best and brightest into its classrooms – even with more modest pension benefits.

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

Bluegrass Institute responds to proposed pension plan

BIPPS Logo_pick

For Immediate Release:  Wednesday, October 18, 2017

Contact: Jim Waters @ 859.444.5630

(FRANKFORT, Ky.) – Bluegrass Institute president and CEO Jim Waters issued the following statement regarding the proposal released today in Frankfort to address Kentucky’s pension crisis:

While the Bluegrass Institute is reviewing the much-anticipated plan released at a news conference this morning by Gov. Bevin, Senate President Stivers and House Speaker Hoover, we’re troubled more by what’s missing from this proposal than by the very modest changes it offers, changes for which there was much hype but little help for – and quite possibly additional harm to – hardworking Kentucky taxpayers in the future.

For example, an absence of any recognition of the practices of increasing benefits and then applying them retroactively – the main culprits in creating the unfunded liabilities in all the major retirement plans – means there also will likely be no safeguards against the same kind of actuarially and financially irresponsible practices in the future.

Also, the plan proposes allowing Teachers’ Retirement System (TRS) beneficiaries to collect lavish sick-day benefits for at least five more years, which will continue to grow the system’s liability. It will also incentivize teachers to do what the administration and legislative leaders said their plan would address: push teachers to retire sooner than they otherwise would.

The sick-days’ policy deepens the state’s unfunded pension liability by offering a benefit enhancement that’s not actuarially established and properly pre-funded and ensures that TRS beneficiaries continue to reap more in taxpayer-funded pension benefits during their first year of retirement than they earned in their final year of employment.

This occurs because TRS beneficiaries not only receive a check for 30 percent of the value of unused sick days they’ve accumulated throughout their careers – they’re paid for up to 10 unused sick days of the 185 days they work per year – but they get to spike their pensions for a lifetime by applying that same amount to their retirement benefits. It’s a corrupt practice that needs to end immediately.

The 30-percent value of those days is determined on the retiree’s final – and usually highest – year of salary, even though the accumulation of days occurs each year, when the salary levels usually are lower.

We’ve also heard or seen nothing today about protecting taxpayers from future shenanigans by actuaries beholden to the systems, who offer false assumptions to supersize benefits for those in the system who pay them.

Finally, nothing in today’s comments or in the plan itself gives even a political nod toward making the system more transparent. If taxpayers are going to be asked to pay more for this system, they must know a lot more about the types and amounts of benefits they are funding.

An alternative plan offered by the Bluegrass Institute Pension Reform Team includes the creation of an independent actuarial oversight board whose members are not beholden to the pressures applied by politicians or the systems’ bureaucrats.

Frankfort’s politicians have been spending too much time in this pension debate wringing their hands over how to keep the political class and state workers – Kentucky’s largest voting bloc – happy while hoping taxpayers will consider the whole matter too complicated and complex to understand, much less engage about.

The message out of Frankfort is that we the taxpayers have no say in this matter and will be forced to continue to pay for these lavish benefits while also funding the increases that will come with forcing a level-dollar approach on payments.

Hardworking, taxpaying Kentuckians – many of whom already struggle to pay their bills and find decent benefits – also will be asked to believe this is “reform,” even if it means more money for government and less for their families.

While we hear the politicians blather on ad infinitum about the “moral obligation” we as a commonwealth have to those on the public dole, we’ve heard little about government’s “moral obligation” to protect the life, liberty and property of its tax-burdened citizens.

For more information and comment, please contact Bluegrass Institute president and CEO Jim Waters at 859.444.5630 (office) or 270.320.4376 (cell) or jwaters@freedomkentucky.com.