Public pension reform – benefits far outweigh costs
The 2013 Kentucky General Assembly passed monumental reforms to Kentucky’s public employee pension system. Bond rating agencies have already taken notice and indicated SB 2 has put the Commonwealth’s economic health in a more favorable position and put our troubled pension system on the path to recovery. With any important reform, difficult decisions must be made and some groups have expressed concerns about the immediate costs. Quasi-government agencies – groups who are supported by the government, but privately managed – are particularly concerned about the immediate impact the changes to the pension system will have on their bottom line. It’s true SB 2 will require public agencies to increase their contribution to the pension system from 2015-2018, which will require tough budgeting decisions. But it’s also true that by 2019, those organizations will be contributing less than they would under the current system (or if no reforms had been made.) In fact, by 2032 the current pension system would have required employers to contribute more than 64% compared to only 40% under the SB 2 revisions. In terms of our pension system, we as a state have been living beyond our means. It’s time to tighten the belt in order to restore financial security in the Commonwealth. The long-term savings of these reforms could mean more than $10 billion over 20 years for taxpayers – that’s a benefit that far outweighs the cost.