The pension reform bill rushed to enactment last month during the veto session did not 'solve' the state's pension crisis as claimed by the governor, the Kentucky Chamber of Commerce and lawmakers who pushed it through — not by a long shot.
In their hubris, supporters highly exaggerated the bill's merit. There's nothing in the bill to roll back or even restrain overspending, including the legislators' own super-rich pensions. In fact, the bill even embeds the acceptance of freewheeling spending deeper into the Frankfort culture.
The bill did not make a dent in the $33.7 billion unfunded liability and won't for at least a decade or more — and maybe not at all, unless future legislation is enacted to curtail benefit creep, especially double and triple dipping, and padding and spiking pensions, which is rampant, an outrage led by lawmakers.
In the meantime, the indebtedness continues to rise. The crisis looms as large as before. Consequently, taxpayers should brace for coming tax increases; university presidents should prepare for budget cuts (in state dollars); public employees should plan on minimal (if any) annual raises; and retirees should not expect cost-of-living increases — not in the immediate future.
While the pension crisis continues, so does the battle. Below is a copy of a letter, in its entirety, sent today by Steve Barger, coordinator of the Kentucky Public Pension Coalition, to the governor, his senior staff and all legislators. [The coalition represents public employees, retirees and unions.]
We would like to take the opportunity to direct you to this opinion piece recently published in the Louisville Courier-Journal questioning the pension deal, Senate Bill 2 and House Bill 440, passed in the final hours of the 2013 Legislative Session.
We believe that this compromise was hardly brokered in a democratic fashion. The process was needlessly rushed and shut out the voices of not only the public, but also the most affected parties: our taxpaying public employees and retirees.
While we support the inclusion of a funding stream that requires the legislature to begin contributing the full actuarially required contribution (ARC) rate to the state retirement system, budget analysts already highlight that the language of the compromise generates a far-less amount, making it difficult to responsibly manage the systems.
Not only is the funding stream inadequate, but the incorporation of the cash-balance plan goes even further in cutting benefits than what was suggested by the Legislative Task force and the Pew Center on the States, both advocates of the cash balance plan. The package further deteriorates the retirement security of Kentucky’s public employees and retirees.
If the public were to have been given the opportunity to weigh-in, this could have been avoided. The Kentucky Public Pension Coalition plans to hold our elected officials accountable to their fiscal promise as we move toward 2014.