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 firstname.lastname@example.org.