Economist Brian Strow stresses the need for state pension reform in the Bowling Green Daily News:
A growing number of states have recently engaged in public pension reform, and rightfully so.
Unfunded state pension liabilities have been an albatross around the necks of more than one state balance sheet. Illinois, New Jersey, Wisconsin, Ohio, Michigan, Connecticut and Rhode Island have all implemented recent pension reforms to reduce unfunded liability. These include both Republican- and Democratic-run state legislatures. The Democratic governors of New York and California have each submitted plans to revamp their states’ public pension plans. Thinking Republicans and Democrats alike realize that public pension reform is not a conservative or a liberal cause. They realize it is about the math. States cannot make promises to public employees which exceed their ability to pay for them.
It is time for Kentucky’s state legislature and governor to engage in public pension reform here. The $30 billion plus hole in the state’s pension system isn’t going away. Rather, like an untended sinkhole, it is quickly expanding. Each year, Kentucky’s pensions are adding hundreds of millions of dollars in unfunded liability. Left unchecked, Kentucky’s unfunded pension liability is going to cripple the entire state’s economy.
The bandwagon of state pension reform is one worth jumping on. Failure to do so illustrates a fundamental misunderstanding of math. Such a misunderstanding will only get worse when our school budgets are cut to feed the pension monster the state legislature has created. Failure to reform our state pension system will cause our state to face yet another credit rating downgrade and drive us one step further to insolvency.
Read Lowell Reese’s devastating Bluegrass Institute report on Kentucky’s pension system here.