State-Journal.com - Some don't want to rush

Lee Jackson, president of the Kentucky Association of State Employees, says a special session on pension reform is not necessary.

"I don't know why we can't wait until 2009," Jackson said. "They seem to rushing things for political purposes."

Instead of doing things piece-meal, Jackson said Gov. Steve Beshear and leaders in the House and Senate should focus on restoring full funding to the Kentucky Retirement Systems.

KRS includes 445,000 members and faces a $26 billion unfunded liability.

"We need to come up with a plan to fully fund the systems over time," Jackson said. "That's what we need to concentrate on."

Beshear said he plans to call a special session in the last week of June to address pension reform if legislative leaders can reach an agreement on what reform is necessary.

"We all agree we must act now to stop the bleeding of taxpayer dollars," Beshear said.

Leaders in the House and Senate met on Monday to discuss pension reform but did not reach an agreement. They are scheduled to meet again next Monday.

House Speaker Jody Richards, D-Bowling Green, said there are still disagreements. Senate President David Williams, R-Burkesville, said the governor's proposal did not go far enough.

The draft plan for pension reform includes recommendations from the Blue Ribbon Commission appointed by Gov. Ernie Fletcher.

Recommendations for benefits of future employees include raising the age of retirement, lowering the cost of living adjustment, requiring new employees to contribute 1 percent of their salary to a health insurance fund and reforming the practice of double-dipping.

Beshear said those changes could save taxpayers $500 million annually.

A presentation posted on the Web site of the Finance and Administration Cabinet also shows that city and county governments would be allowed to reduce their retirement contributions by about $56 million. The proposal was included in HB 600, the pension reform legislation that was introduced during the 2008 general session.

Mike Burnside, executive director of the Kentucky Retirement System that includes the County Employees Retirement System, said he's concerned about allowing cities and counties to pay less than the required full contribution.

"That might help the cities in the short term but not with the long-term problem," he said. "Everybody should be concerned about finding a long term solution and making sure we put together a plan that will restore funding."

Franklin County Judge-Executive Ted Collins said the cities and counties are required to pay the full contribution, unlike the state. He said governments should pay what is required to provide the benefits promised to employees.

"We need to meet our obligations," Collins said.

Frankfort Mayor Bill May said local governments are in dire need of relief concerning pension contributions.

"Gov. Beshear is showing tremendous leadership by focusing on he pension issue," he said. "Hopefully the problem will be solved in a non-partisan fashion."

Reducing the benefits for future employees could help reduce the unfunded liability in the future, but it would not create immediate savings, Burnside said.

"It will not make any significant change in the (unfunded liability) for several years to come," he said, "until the population of employees under the new benefits become a significant portion of the overall population."

Sen. Julian Carroll, D-Frankfort, said it's essential to pass a pension bill before the end of the fiscal year on July 1.

Similar legislation was proposed during the 2008 regular session but lawmakers in the House and Senate disagreed over a proposed 1 percent retirement annuity plan. The House rejected the proposal but the Senate would not back down.

Carroll said he thinks leaders in the House and Senate can come to an agreement.

"It's imperative," he said.

A special session would cost taxpayers an estimated $60,000 per day and a session must last at least five days.

Beshear also appointed a 27-member working group to evaluate retirement investments and recommend ways to fund the pension obligations. Jackson also said he's disappointed the work group will not include any representatives of state employees.

"I think that's a mistake," he said. "State employees feel like they need to have a voice."

The Associated Press contributed to this article.

5.	Posted by txj June 3, 2008
	The Gov's proposal and HB 600 both included setting the COLA at 1.5% effective July 1, 2009 for everyone; past and future retirees. Note the change for future retirees: the COLA will be pro-rated based on the retirement month. Thus next year, if an employee retires June 1st, they would receive 1/12 of the COLA (1.5% divided by 12). That will be a huge slice in the monthly benefit compared to an employee who retired last Friday. The paltry annual increments over the last few years along with those scheduled for the next two years will also result in reduced future retirement benefits (the high five will be flat). People better pump up their 401K's. I agree with ema, partially - the COLA should be set at the CPI and funded, however it should apply to everyone as next year when both milk and gas are $5.50 a gallon all retires will be hurting. Fixing the COLA at 1.5% is wrong when the CPI is 4% and when the CPI is 0.5%. This crisis is the result of not funding the pension system, year after year. It is wrong to neglect the system and then as a solution cut the benefits for current and future retires. The Gov. is intentionally misleading when he says there will be no impact to current retires; a reduced COLA at 1/3 of what it should be will significantly erode the retirement check's purchasing power in just a few years.