Editor’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.”
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 email@example.com and @bipps on Twitter.