On Thursday, the Kentucky Retirement Systems
That's a big deal, KRS officials said after their briefing by actuarial advisers from
"From what we can see, we've hit the bottom," said
However, the work will be even harder this winter for Governor-elect
Unless Beshear, a Democrat, and the Republican-led legislature can agree on new revenue sources, such as casino gambling, everything else the state funds -- schools, universities, health care, social services, prisons, roads -- will be squeezed even tighter in order to find enough money for the higher contribution rate.
Part of the reason for the higher rate is a more conservative assumption the KRS board adopted this year about life expectancy.
"The answer," said KRS board chairman
"Revenue," interjected Eager.
"Economic activity in
KRS is responsible for providing pension and medical benefits for several hundred thousand active and retired public employees in
Within KERS and CERS, there are separate pension funds for employees with non-hazardous and hazardous jobs.
Overall, KRS on
Unfunded pension liabilities grew because funding levels dropped a bit this year in most of the pension systems managed by KRS other than KERS (Non Hazardous), due to the new life expectancy assumption and more lenient payments allowed for some local government employers, KRS officials said.
Among the agency's individual plans, KERS (Hazardous) was funded at 54.8 percent, compared to 55.5 percent last year; CERS (Non-Hazardous) was funded at 49.1 percent, compared to 52.7 percent last year; CERS (Hazardous) was funded at 45.3 percent, compared to 48.4 percent last year; and SPRS was funded at 27 percent, compared to 27.1 percent last year.
KRS is in such woeful shape because of many years of inadequate contributions by state leaders and unreasonable expectations about investment returns and payroll growth.
The legislature passed a bill this summer that will allow some quasi-public employers, such as regional universities, county health departments and community mental health nonprofits, essentially to buy their way out of the pension system and avoid future contribution hikes.
KRS is still working on the regulations that will be necessary for the quasi-public employers to withdraw from the pension system through this legislation. But rank-and-file workers at some of these agencies have expressed alarm at the prospect of having their state pensions frozen in the middle of their careers and replaced with a less generous defined-contribution account.
Some of the demographics of the state pension system are proving difficult to navigate,
For example, the number of retirees drawing a check from the state pension system is ever-rising, up to 47,430 this year, while the number of active workers contributing to the system with every paycheck continues to fall, down to 33,696 this year. On top of that, state salaries have been effectively flat for many years, with pay raises but a distant memory, and contributions to the pension system are based on a percentage of payroll, the advisers said.
Kentucky Personnel Secretary
"In the executive branch, we are right-sizing job positions," Stephens said. "There is no foreseeable increase coming in state employment."
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