Kentucky officials have been all over social media today in anticipation of a report on the status of Kentucky pensions by PFM Group, a consulting group hired to look in to our pension mess.
In one of their reports, Report #2 – Historical and Current Assessment, PFM makes the following observation:
Weakest Pension Funding of Any State
The Commonwealth’s share of the retirement system aggregate pension underfunding has been calculated by the credit rating agency, Standard & Poor’s (“S&P”), as the worst among the 50 states– with just 37.4% of total current obligations now funded, compared to a national median of 74.6%as of FY2015, the most recent period reported by S&P on this basis.2
- While the funding levels vary among the eight different plans supported by the Commonwealth, all are underfunded, and only the comparatively small Legislative and Judicial plans are funded at or above national averages.
- The primary pension plan for civilian state employees, the Kentucky Employees Retirement System Non-Hazardous pension plan (KERS-NH) was only 16% funded as of the end ofFY2016 – one of the most challenged pension programs in the nation. This funded ratio was based on the actuarial assumptions as of June 30, 2016 and would be lower using more conservative assumptions.
Note the first bullet point. While the state employee pension systems were not being properly funded, the pension fund for Legislators and Judicial employees are funded at or above national averages.
And why are having this discussion at all? In 2013 Sen. Damon Thayer, R-Georgetown, made the following comment on Senate Bill 2:
And don’t forget former House Speaker Greg Stumbo, D-Prestonsburg,
before the vote on SB 2 that the pension fix was not perfect. But the House and the General Assembly should be proud that it has found funding for the pension system, which no other state has done, he said.
Fast forward to 2017 in a story in Pure Politics:
Thayer is proposing “more cuts to spending” when the two-year state budget is written in the next legislative session in 2018. However, he did agree that the state of pension funding is bad enough that the state “can’t cut ourselves” to solvency.
Let legislators know that you expect them to do their jobs, and getting paid to come back for a special session and getting special pay is not acceptable.