The Lexington Herald-Leader is reporting that in the current proposed budget before the Kentucky General Assembly, cost-of-living adjustments (COLA’s) will be suspended for state retirees.
This is significant because the state and local retirement plans are bound by what is called an “inviolable contract” (read more on page 8 of “Future Shock”) meaning that the retirement benefits in place on a day a worker is hired cannot be reduced over that employee’s lifetime. The only two aspects not subject to the inviolable clause are COLA’s and health insurance in the teacher’s retirement system.
Essentially the General Assembly is attempting to reduce costs in the state retirement system as far as they can without getting their hands dirty. This is a good first step however there are still very serious problems that persist and need to be addressed sooner rather than later.