Steve Beshear held a press conference today asking the retirement system boards to provide $37 million+ to cities, counties and school districts in the wake of major shortfalls.
The governor recommended that cities and counties be allowed to spread their required contributions over a ten-year period instead of the current five. He says it would provide $37.5 million of immediate relief in the next fiscal year.
From a press release:
“Just as the state is struggling to cope with the worst national financial crisis since the Great Depression, cities and counties are straining to provide the most basic services to their residents,” said Gov. Beshear, who was joined in today’s announcement by Louisville Mayor Jerry Abramson, Lexington Mayor Jim Newberry, Sylvia Lovely, executive director of the Kentucky League of Cities (KLC) and Bob Arnold, executive director of the Kentucky Association of Counties (KACo). “My proposal will provide more than $37 million of immediate relief to our local governments in a way that keeps our pension systems financially sound for years to come.”
Gov. Beshear’s recommendations are in response to the report of his bipartisan Public Pension Working Group, chaired by Finance and Administration Cabinet Sec. Jonathan Miller. Gov. Beshear said he hoped the KRS board would meet prior to the start of the upcoming legislative session to address his recommendations.
“Allowing additional time to achieve full funding of the actuarially required contribution is a critical component of our strategy to bring desperately needed financial relief to county government,” said Bob Arnold of KACo. “We look forward to working with the governor and legislative leaders to assure that the public pension system and the local governments that support that system remain financially strong.”
Other reform issues recommended today include:
- Adopting effective securities’ litigation policies to enable the pension systems to claim millions of dollars of damages from Wall Street losses where companies have engaged in illegal or unethical practices;
- Exploring creative health-care reforms adopted in other states to provide affordable health benefits, while ensuring the long-term financial stability of the funds;
- Promoting the state’s existing optional defined contribution, 401(k)-style plan, the Kentucky Public Employees’ Deferred Compensation Authority, to encourage individual retirement savings;
- Providing more oversight and transparency of pension system funds to enable the Governor and the General Assembly to ensure that the systems are properly funded; and
- Amending enabling law to authorize the Kentucky Asset Liability Commission (ALCo) to issue pension-related bonds when funds are appropriated by the General Assembly to pay off unfunded liabilities of the pension systems. Specifically, consideration should be given to authorize the issuance of bonds, if market conditions are favorable, to repay funds to the KTRS pension fund that have been used to cover health insurance costs for KTRS members.
Mike Cherry has pre-filed legislation to provide the $37.5 million if the Kentucky Retirement Systems decide not to adopt the governor’s recommendations.