Dorsey Ridley: With wait now over, it is the time for careful review of governor’s proposed pension plan

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The wait is finally over – kind of.

After months of closed-door meetings on how to address Kentucky’s pension challenges, the governor and Republican leadership released an outline of a plan. I will be carefully reviewing that outline in the upcoming days, with an eye on the fact that 14 percent of Kentuckians depend on the pension system to retire in dignity.

I cannot say this proposal eliminates my fears. I am worried about attracting young people to teach, to test our drinking water, to protect our children when they are being neglected or abused. And, I am worried about keeping those qualified employees once we have them. Public employees serve the people of this Commonwealth in many ways. What we lacked in competitive salaries – we made up for with the promise of a pension.

The challenges of our pension system are complex, and the governor has only released an outline, but there are some themes I want to highlight. It would transition most public employees from traditional pension plans to 401 (k)-style plans with the exception of hazardous duty employees, like our police officers and firefighters.

Most current teachers and other government workers would have their pension benefits frozen once they reach 27 years of service under the outline, although they would be able to take advantage of a 401 (k)-style plan at that point to continue saving for their retirements. Teachers who have 27 years of service or more would have a three-year window before they would have to switch to the 401 (k)-style plans to avoid a wave of retirements.

The majority of new hires, including teachers, would go straight into the 401 (k)-style plans. The teachers’ 401 (k)-style plans would be more lucrative, however, because they still wouldn’t receive Social Security benefits.

The outline doesn’t include some of the most outrageous recommendations by some well-heeled Philadelphia consultants. The governor’s consultants actually suggested slashing benefits for many current retirees by 25 percent or more.

As they say, however, the devil is in the details. And even this outline has some details that are of immediate concern. One would suspend for five years cost-of-living benefit increases paid to retired teachers. Another would require all public employees and teachers to begin paying 3 percent more next year for retiree health care benefits.

The next step is for the legislative staff to take this outline and draft a bill, a process that is already underway. Such a bill is likely to be hundreds of pages long, and no such bill has actually been released.

The governor has said he wants to call a special session to consider that bill before year’s end, but he hasn’t announced a date for the session. A special session would likely be five days, the minimum number of days it takes for a bill to get through the legislative process.

I will know more when the actual bill is released. In the meantime, I encourage you to share your thoughts on the pension outline. Does the bill meet “the legal and moral obligations owed to current and retired teachers and public servants,” as the governor said?

You may leave me a message by calling the toll-free Legislative Message Line at 800-372-7181. You can also e-mail me directly at Dorsey.Ridley@lrc.ky.gov.

Dorsey Ridley is the Senate Minority Caucus Chair representing District 4, including Caldwell, Crittenden, Henderson, Livingston, Union and Webster counties.

 
 
 
 
 

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One Comment

  1. Janie Scott says:

    Not a good plan to have teachers’ salaries reduced by 3% for health care benefits. Not fair for them to pay the penalty for the state government not meeting its moral obligations in years past. Do the right thing Governor Bevin–do not play politics with our education system.

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