Let’s talk about the pension crisis
By Rep. Donna Mayfield
As most of us have heard, we are faced with a major financial crisis due to all of Kentucky’s major pension systems being in critical condition.
There is not one stand-alone reason for their current condition, but rather, a combination of factors which led us to where we are today.
There was the mistaken belief that healthy investment returns would make up for any funding shortfalls. There was also faulty assumptions concerning payroll growth, when payrolls were actually declining. These assumptions led to inadequate funding requests which left our pension systems in the unhealthy state in which we find them today — among the worst-funded in the nation.
The PFM Group was tasked with auditing our pension systems and released their final report and recommendations last Monday. The report was very upsetting and frightening to many employees and retirees, which is totally understandable. There were also, of course, many rumors flying concerns PFM’s recommendations, which added to the crisis.
I want to remind everyone that this was simply a report of recommendations from this company. It is not a bill to be voted on by the General Assembly. The legislature will study the reporter and recommendations, but will compile our best ideas from many discussions from all parties to lead us to the best solutions for solving our pension crisis.
This plan will be introduced in a bill and then go through the legislative process, including an upcoming Special Session of the General Assembly when called by the governor.
If we took no action to revive the pension systems, there would immediately be major cuts to state funding that would affect public education, medical services to Kentucky’s most vulnerable citizens, public safety and transportation infrastructure. Additionally, the systems would simply bankrupt themselves in a very few years. We obviously cannot afford or permit either scenario to happen.
We cannot repeat the mistakes of the past — we must address the pension crisis immediately to ensure the system is sufficient to meet the promises made to our public employees, retirees and teachers. They have earned the security of their pensions and are entitled to them. We have an obligation to these employees and retirees in return for their many years of service to the Commonwealth, and I absolutely support the promises made in their inviolable congrats and will defend them.
There are difficult decisions to be made and aggressive steps that need to be taken to repair our ailing pension systems. The good news is that there are solutions to this problems. The governor and we legislators will evaluate the report on our pension systems prepared by the PFM Group and determine what changed need to be made. We are committed to honoring our legal obligations to all employees, teachers and retirees and to make the best decisions to revive our ailing pension systems and thereby providing true retirement security to those who have worked and earned it.
We also want to remove the threat of this happening again to our Commonwealth by implementing a long-term plan to ensure the solvency of our pension systems to last through the years.
I appreciate those of you who have emailed or written my about this very important issue and welcome your input. Please feel free to contact me at anytime at my Frankfort office by calling 1-502-564-8100 or email firstname.lastname@example.org.
Rep. Donna Mayfield (R-Winchester) represents the 73rd district, which includes Clark and Madison counties. She can be reached at Donna.Mayfield@lrc.ky.gov.