Pension concerns trigger retirements

Aug. 11--Concerns over what state legislators might do to the public employee pension systems have affected law enforcement agencies statewide, with officers opting to retire before any changes are made to the pension plans in this fall's expected special legislative session.

Members of the Kentucky Law Enforcement Council discussed the issue Thursday morning at a meeting at the Hampton Inn in downtown Owensboro.

After the meeting, Sen. Whitney Westerfield, a Hopkinsville Republican, said he didn't yet know what changes legislators would make to the pension systems if they meet in special session to discuss the issue.

Meanwhile, Owensboro Sen. Joe Bowen said people were reacting to rumors, and there isn't a legislative plan on pensions at this point.

Gov. Matt Bevin is expected to call a special session in September or October for legislators to take action on the public pension crisis and tax reform. The Kentucky Employment Retirement System and the teacher retirement system have both underperformed and been underfunded over the years, leading to massive deficits.

Bowen, a Republican, told an Owensboro audience last month that, in the worst-case scenario, the pension deficit could range from $40 billion to $70 billion. He described the pension problem as the worst crisis the state has seen in decades, or "maybe ever."

The Kentucky Employee Retirement System has 13.8 cents for every $1 in benefits it must pay to retirees, Bowen said in July.

Law enforcement pensions are also affected. Bowen said the county employee retirement system and the state system for hazardous-duty workers each have about 59 percent of the funds they need.

Westerfield, who is chairman of the Senate's committee of judicial issues, raised the issue Thursday during a discussion about the state's law enforcement academy in Richmond. Council members had raised concerns about difficulties getting newly hired officers into the police academy within a given time frame. When Westerfield asked if enough new officers were being trained to replace retiring officers, Oakie Greer, director of the training operations division at the academy, said that more officers were retiring out of "fear of the pensions."

"Pensions are the big issue," Greer said.

Daviess County Sheriff Keith Cain, chairman of the Law Enforcement Council, said retirements affect agencies even if new officers are hired.

"The people you are replacing, you're replacing with brand-new officers," Cain said. "You're losing years and years of experience."

All police officers and sheriff's deputies, except constables, are required to meet Police Officer Professional Standards. McCracken County Sheriff Jon Hayden said officers are not easy to replace.

"We sometimes wonder if the folks in Frankfort understand what it means when a department loses a POPS-certified officer," Hayden said.

When a deputy without any experience is hired, "it's typically about a year before that person is of any use to our agency," he said.

Retirements are also affecting the Criminal Justice Training Department, which runs the police academy, said Commissioner Mark Filburn. The pension problem for law enforcement began when the "Tier I" retirement plan, which gave employees a pension based on the three highest-paid years of service, was replaced with the Tier III plan, Filburn said. Tier III is often known as the "hybrid 401(k)" plan, which guarantees people in the system a 4 percent return on their investments, plus 75 percent of earnings above the 4 percent.

"This (issue) did not come up just now. This has been a problem for several years," Filburn said.

Fran Root, executive director of the law enforcement council, said, "The big scare right now is the legislature is looking at some of the retirement benefits that could be affected" in whatever plan is introduced during the special session. A major fear is "losing your health insurance as a retiree," he said.

"That's why you're seeing a pretty big exodus" of employees, Root said.

When asked if he knew legislators were looking at changing health coverage for future retirees, Root said, "that's at least a rumor.

"The new guys (hired after January 2014) have already lost the big benefit from the public retirement system. They're down to Tier III," Root said. ".. They can get that almost anywhere."

Westerfield said people leaving government employment out of concerns over the future of their pension plan "is not isolated to law enforcement.

"I get calls from the educational system (and other state employees), and they say, 'Whitney, should I retire? Should I put my notice in now?' " Westerfield said. "What's frustrating is, I don't have an answer."

A group that has been studying the state's pension problems is scheduled to make its recommendations later this month to the Public Pension Oversight Board.

"I know they're talking," Westerfield said of the pension board. "They'll unveil a plan at some point," and it will be made public before legislators are called into special session, he said. Because the special session will be very short, "we have to know what it looks like before we get there."

Bowen, who was not at Thursday morning's meeting, said later that nothing has been decided about a pension proposal for the session.

"The thing about it is there are all kinds of rumors floating out there right now," Bowen said. "But they are only that. There's a lot of angst, and there are a lot of assumptions being made.

"There are going to be structural changes, but people are fearful of draconian measures that are not going to be a part of what is done," Bowen said. "There are so many rumors out there that it's hard to address them all. There's nothing for any of those people to draw conclusions from at this point."

James Mayse, 270-691-7303, [email protected], Twitter: @JamesMayse

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