Update on Pension Review Board Action
The Governor hired a new pension study group, although a report was filed last spring by a group appointed by Governor Brashear.
The PEM Group has been engaged to complete a performance audit on all state retirement plans, including KTRS. They have previously worked with Tennessee, finding that a defined benefit plan is preferable, only to have TN go to a plan for using 401K. Their report is projected to be completed as early as December, 2016.
The Public Pension Oversight Board is composed of 3 Senators and 3 Representatives in addition to seven members serving in capacities within State government. The group has had two open meetings, one in September and one in October, at which representatives of public policy groups provide facts and opinions relevant to the operation of their group as it relates to the pension system. The one point common to most of the groups was the need for transparency as defined through legislation. The recommendations were as diverse as the purpose of the groups. The KY League of Cities called for anti-spiking (pension formula should exclude sick days, vacation days, etc). They also felt county employees should be separated from city employees. The Chamber of Commerce called for a performance audit of KTRS along with structural changes which they recommend would encompass a shift from defined benefits to defined contributions. David Atkinson, representing the Chamber, questioned the validity of the inviolable contract. The KY Public Retirees called for an increase in the Board, that the unfunded liability be addressed and that expenditures should be investigated. Jim Walters representing the Bluegrass Institute called for more transparency and an expansion of information given to the public. Kathy Gullett, president of KRTA, very succinctly described our current pension system through KTRS as a very efficient plan. She emphasized the 36,000 members as a group of which 89% reside in Kentucky and “give back” to our economy because they are able through their pensions. She proposed that changes would be dangerous as they relate not only to quality of life for current retirees but also for in service educators and the acquisition of new teachers.
The group was apprised that over the past 30 years the pension system as currently invested has had 8.15% growth which can continue as long as the investment is stable, but if the ARC is not paid as promised in the inviolable contract, KTRS will have to use current assets to “make payroll” each month and each year.
Published on November 15, 2016