Kentucky Budget Only A ‘Band-Aid’ For Hemorrhaging Pensions
Kentucky Republican Gov. Matt Bevin has put forth a budget to help fund the unbalanced state pension program, but some argue its a small fix to a much bigger problem.
Bevin was elected late last year on a campaign of reform and fiscal responsibility. The state public-sector retirement program has become a huge cost for the state under previous administrations. Bevin signed a budget April 27 that would add additional funds to the pension program but some argue the plan is only a temporary fix and much more must be done to help reform the system.
“We are delighted that this budget makes a historic commitment to our ailing pension system and restores fiscal responsibility in state government,” Bevin said in a statement. “We are being good stewards of the hard-earned dollars that are entrusted to us.”
The proposed budget will invest a billion dollars into the pension system to help fund benefits. It will be the largest contribution into the Kentucky pension system ever included into a single budget. Bluegrass Institute President Jim Waters notes the funding plan is good but doesn’t even come close to addressing the systemic problems within the pension system.
“The problem is that until we deal with the expenditure side of the issue, the additional funding will be a patch, a kind of Band-Aid,” Waters told The Daily Caller News Foundation. “We still must address the rich benefits we have been giving out as a state. Until we do that its like having the front and the backdoor open.”
The pension system has funding problems due in large part to excesses retirement benefits among other issues. Waters adds the issues are extensive and it will take more than just one budget to get it fixed. He notes that in the short time Bevin has been in office he has fought significant opposition to reform the system.
“This is not a problem we got into overnight and its not a problem we’ll get out of overnight,” Waters added. “Kentucky has the worst funded state employee pension system in the country.”
The pension system also has transparency issues making the true extent of the problems unknown. Republicans introduced two measures to help reform the system and make it more transparent. Democrats in the state House have blocked the reform bills despite them passing with bipartisan support in the Senate.
Senate Bill 2 would require the Kentucky Retirement Systems to disclose how pension funds are being invested. Senate Bill 45 further reforms the pension system by requiring the system to disclose what retirement benefits are going to which state officials. Democratic House Speaker Greg Stumbo blocked both measures from even coming up for a floor vote.
The Kentucky Retirement Systems Board of Trustees has also been targeted as an area in need of drastic reforms. Chairman Thomas Elliott was dismissed by the governor through an executive order and replaced with Dr. Bill Smith. The board, however, openly defied the governor and never allowed Smith to take his place as chairman. Smith has been an adamant supporter of pension reform.
Elliott, Stumbo and Bevin did not respond to requests for comment by TheDCNF.
Editor’s Note: The passage “Bevin signed a budget April 27” originally said he proposed the budget.
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