Bluegrass Institute responds to proposed pension plan

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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.

Comments

  1. On the public dole,,,, ??? Apparently you are unfamiliar with how an income works. If you agree to do a job for a set fee it is not a dole when it’s time to be paid.

    • Since when is some moron politician a representative of us taxpayers? No individual or even group of individuals agreed the any of this. A politician lied in order to buy your vote and appease their union handlers. Yiu can your ‘agreements’ and put em where they belong – in the trash along with all promises made by lying demorat scum.

      Or you can watch the private sector bleed out of your state just like Illinois. Don’t matter to me.

  2. Phyllis Patterson says:

    “ON THE DOLE”? Your are so self absorbed that you don’t realize that we as employees of the Commonwealth payed into these retirement plans for 27 plus years or more. I paid into the system for 30+. I started working for the State in 1975 and made an incredible salary of 580.00 per month. Most employees worked for the state, not because they made good money, they didn’t, but for the pension they were promised. The Sate of Kentucky should have matched those funds until said employee retired. That did not happen. Retirement funds were put into bad investments and lost money when the stock market crashed. I am so sick of you saying that we don’t deserve our pensions and that the taxpayers will have to pick up the slack. You may have to, but do not blame the retirees, blame your legislators or the economy. You have always disliked state employees but I wonder if that would change if you needed one. This State could not survive without the services they so humbly provide.

    • No one cares about how stupid you were to believe the promises of idiot politicians looking to buy your vote. We are tired of paying for your lavish salaries and pensions. Voters will vote with their feet and move to states like Wisconsin which actually had the courage to tell you and your Union stooge bosses to go f yourselves.

      • Lavish salaries and pensions? You’ve got to be kidding, or you just have no idea what you’re talking about.

    • Janie Scott says:

      So well stated. I agree wholeheartedly.

  3. Nancy Broyles says:

    You are wrong. You said that the taxpayers of Kentucky had no say in this matter…but aren’t the “political class and state workers – Kentucky’s largest voting bloc” taxpayers too? And don’t those same people pay into the very “lavish” pension that you are so concerned about. This is their money! The unfunded liability comes from the legislature’s failure to fully fund the ARC over the last two decades.

    As one of those who won’t see a “lavish” benefit (I won’t be eligible to retire in the next five years), let me explain something to a layman like yourself who hasn’t spent more than ten minutes inside a K12 classroom since his child graduated from high school. Today’s classrooms are no longer where children go to be talked at. Teachers today design lessons that fully engage their students and are more often listening and guiding than doing all the talking. We are also the ones who are there before school starts and we’ll after it ends helping children with everything from homework to how to write a resume. We spend our summers attending as many workshops and conferences as we can to learn new and improved ways to engage our students.

    Our salaries start at an average of $35,166 if we work on a large enough system. That is almost half of what anyone else with a bachelor’s degree in ANY field makes starting out. We are required to obtain a master’s degree or equivalent education, yet we don’t receive comparable pay ( teachers $51,000, private sector $75,000). We don’t take our sick days for three reasons. One, if you have stayed in a school system for a while, your body becomes immune to some of the types of germs that tend to work through the students. Two, you know how much work it takes to prepare for a substitute and how little your students learn with a substitute. Unless you are contagious or just cannot make it, you go in. Three, teachers use there sick days when they are young and have babies and small children. Later, they are healthier and don’t take them because they don’t need them. They save them for “just-in-case.” Our “lavish” benefits are ALL we have to survive on since, as GOVERNMENT pension participants, we fall under the Windfall Elimination Provision and the Government Pension Offset. In itty bitty terms so you understand (since you conveniently left THAT out in your description of our “lavish” benefits), we will get a small percentage of our Social Security (if any), and probably no survivor benefits when our spouse dies. Without our “lavish” benefits, your favorite first grade teacher may be sleeping under a park bench.

    Do everybody a favor. When you don’t know all of the facts, don’t assume. It makes, well, I think you understand.

    • You are not the victim. Nice try though. Is private sector serfs have to pay nearly all of any pension contributions into funds that often get pilfered by Wall Street cronies.

      You people pay what? A 2% ‘contribution’ while we pay the rest.

      And you act like our private sector salaries are so much higher than your 35-40k BASE. Hint: it isn’t. Factor in your royalty level medical plans and there’s no surprise there no money left.

      Keep taxing us. I used to argue against it but a fight is coming between the free stuff army (you and all the welfare trash) and us who actually want to work for a living and be left alone.

  4. sally sue says:

    State employees are also hardworking Kentucky taxpayers. We’re not “on the public dole” we’re providing essential services. Nice try demonizing public employees though.

  5. You know, most of us taxpayers don’t have jobs that pay a pension. You should consider yourself lucky that you have a pension. Personally, I don’t think public jobs should be unionized or have a big fine pension. Its a public job paid for with taxpayer money. As a overtaxed taxpayer, I would like to know is how much more tax is this going to cost me to cover somebody else’s retirement cause I’m sure that’s what its going to come to? I wish I had a big fat pension to look forward to but all I do is work and pay bills and pay too many taxes..

    • Wrong. Most taxpayers with masters degrees work for companies that have matching 401Ks, hour lunches and other nice benefits.

      First, we do not get social security. We have paid 13% of our income each year that was spent by our elected officials. In addition, they match our money, which is a common business practice and given that teachers are paid less for similar schooling, the least that our government can do. If we want to go to a 401K style, salaries should increase to match what professionals in the business world with similar education get paid. The state will need to raise taxes or find the money to repay the money they have stolen every year from us since 2009. They literally spent our money and now we are the bad guys, according to Bevin, who are greedy. I have a masters degree (soon to be 2 masters degrees), National Boards, and a ton of experience. I will take all of that with me to another state. There will be massive retirement and people who will not go into the teaching profession. Kentucky will have an unbelievable crisis and just talking about this has people rethinking their careers. We have a huge amount of people who will retire and people with less than 5 years in-that will leave. Many people have said to themselves, “I didn’t expect a high salary when I went into teaching, and I knew I’d never be rich, but I knew my future would be secure for retirement.” It was a trade off. If the state can’t make the trade off, the deal falls apart. Finally, there are many states whose economies are thriving and also have pension systems for their teachers. They have committed to supporting education. So don’t be so quick to say anything must go. Pensions continue to be successful in many states. Don’t doom Kentucky to be the bottom state that no one wants to teach in.

  6. Ru kidding willfully underfunding over 20 years buried what was well funded any other excuse or reason offered is crap. If all the systems would have been funded as required (like legislators and the judicial) we would not be discussing this topic

  7. Tough Love says:

    I too was amazed at the almost complete lack of “substantive” pension reforms. Granted the workers would fight it, but when a Plan is in the DIRE STRAIGHTS that KY Plans are, the 1-st step in addressing that is to STOP digging the financial hole you are in deeper every day. And NOTHING (yes NOTHING) will solve that problem unless the reforms include VERY MATERIAL (think 50+%) reduction in the value of annual future-service pension accruals for the future service of all CURRENT workers.

    The proposed “reforms” will buy a year or 2 or 3 before they collapse.