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Kentucky’s public university leaders express concern over soaring pension costs to House subcommittee

By Tom Latek
Kentucky Today

Leaders of Kentucky’s public universities say they are grateful for the funding increase proposed by Gov. Andy Beshear in his budget, but say increasing pension costs are their biggest financial hurdle.

Presidents of public universities in Kentucky expressed concern over increasing pension costs. From left, Kentucky State University President Dr. M. Christopher Brown; Dr. David McFadden, interim president of Eastern Kentucky University; and Murray State University President Dr. Robert L. Jackson. (Photo by Tom Latek, Kentucky Today)

During an appearance before the House Budget Review Subcommittee on Postsecondary Education on Thursday, Kentucky State University President Dr. M. Christopher Brown described his plight. “A $13 million-plus pension cost and resultant reduction in operations, which we cannot currently sustain,” he said.

Murray State University President Dr. Robert L. Jackson called the pension issue the biggest one they face. “We paid about $6.3 million this year, based on a rate of 49 percent of the payroll, which was frozen this year”, he said. “If the rate was to go to 93 percent, as recommended, it would increase our exposure by more than $5 million. Ninety-three percent is unmanageable and it’s unsustainable.”

Jackson said when he was a state Senator, the rate was only 10 percent. “It’s a matter of trying to find a solution to address that problem. It’s putting public institutions and other quasi-governmental agencies at risk.”

Similar comments were made by Dr. David McFadden, interim president of Eastern Kentucky University. “The single biggest threat to the Commonwealth and our institutions is this unfunded liability in the pension system,” he said.

“We continue to evaluate the options that are contained within the legislation passed by the General Assembly during the special session,” McFadden said. “We are appreciative of the financial support that has been expressed in the governor’s budget, as it relates to pension relief, but I would say that as we look at the one percent funding increase that is proposed, the 50 percent match that was proposed for the pension increase, it still leaves our university with a nearly $3 million cut that we will be tasked with dealing with when it comes to the budget in Fiscal Year 2021 and 2022.”

More university presidents are expected to appear before the panel next week.

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