A legislative task force may consider changes to Kentucky’s public pension plans under a resolution passed by the Senate State and Local Government Committee Wednesday.
House Concurrent Resolution 162, which passed by a 6-0 vote, calls for a 12-member Kentucky Public Pensions Task Force that will examine all state-administered retirement plans and recommend any changes in investments, benefits and funding.
Rep. Mike Cherry, D-Princeton and sponsor of HCR 162, said the unfunded liabilities faced by state workers, teachers, state police, legislators and judicial retirement plans – more than $30 billion combined –prompted him to draft the resolution.
“We are addressing the problem,” Cherry said after the meeting in reference to House Bill 1, which was passed in 2008 and gradually increases the state’s contributions to pension plans while decreasing some benefits for future retirees.
“But because of the economic conditions since 2008, we still find ourselves with a problem of an increasing unfunded liability, and we need to have this study group to look at things we can do.”
The Kentucky Retirement Systems, with about $13.5 billion in assets, oversees pension plans for more than 340,000 state and municipal employees and retirees.
With retirement and health insurance obligations combined, it faced an unfunded liability of $19.2 billion at the end of fiscal year 2011, but its officials have said there’s no risk of defaulting on current obligations.
While Lexington police and firefighters testified against a provision giving the task force authority to review Lexington’s pension system, Sen. Damon Thayer, a Georgetown Republican and chairman of the committee, said he’s more concerned with the unfunded liability of the state retirement plans.
“If we start messing with this bill at this point, I think we have a chance of killing what I believe is a very important task force on the most important fiscal issue facing this commonwealth, and that’s public employee pension reform,” Thayer said during the meeting.
“I don’t know if this will pass the full Senate. I don’t know if I will be appointed co-chair of the task force or not, but I can tell you, I’m not really interested in spending a lot of time with Lexington, Fayette County and their pension issues because we have a big enough problem in the state.”
If the Senate passes the resolution, the 12-member panel will be made up of three legislators–two appointed by Senate President David Williams and House Speaker Greg Stumbo and one by minority party leadership – each from the Senate and House state government and appropriations committees.
Chairmen of the four committees, if not appointed, would serve ex-officio roles on the panel.
The task force would meet monthly during the 2012 interim and submit its findings to the Legislative Research Commission by Dec. 7, according to the resolution.
The debate over moving public employees to a defined contribution system, similar to a 401(k), may be reignited if the Senate passes HCR 162. Thayer joked that he planned to file a committee substitute Wednesday calling for defined contribution pension plans but “thought better of it.”
Wednesday also marked the final time Cherry, who’s retiring after this session, presented a bill he’s sponsored to a legislative committee, he said. He’s served in the House since 1999.