Lawmakers are looking to make pensions a priority in the 2016 session but fear there will not be enough money to fully address the problems within the state’s retirement systems.
In the budget and pensions panel at the Kentucky Chamber’s legislative preview conference, Senate Appropriations Committee Chair Chris McDaniel said the crafting of the budget will be a difficult one as there are many big ticket issues with very few available funds to go around.
“I like to say I am the only guy in the room with $60 billion who is broke,” McDaniel said.
McDaniel added that there is a misconception that there is additional revenue to be spent but there is very little new money.
In terms of big issues to tackle, McDaniel said it is time to tackle the issues facing the Kentucky Teachers’ Retirement System (KTRS) and address the structural as well as funding issues facing the pension fund. Comparing it to a business, McDaniel said there needs to be a long term solution to these issues.
As for where we can find money in the budget for some of these issues, McDaniel said there are some dollars in the SEEK formula where kids are being double counted, there are extra costs within the Medicaid system and more.
State Sen. Morgan McGarvey agreed with McDaniel on the areas that were mentioned as main priorities and added he feels the state should look at different possible revenue sources including the issue of expanded gaming and the need for some form of tax reform but said it is not likely that progress will be made on that front in the next session.
McGarvey also discussed the KTRS work group that just concluded its work and said that while there could be some structural changes, there should be attention paid to the fact that no matter what changes are made, the massive underfunding of the pension systems still remains.
Auditor-elect Mike Harmon discussed his support for a full performance audit of the Kentucky Retirement System (KRS), something first called for by the Kentucky Chamber, and added that there should be audits of all of the state’s pension systems.
In terms of how the audit will be funded, Harmon said he would like to get into the audit sooner than later stated there are a couple options on how his office could get the money to conduct it. The Kentucky Chamber has called for finding the funds before the 2016 session to stop any delay.
On what can be done in the upcoming session to fix the state’s pension systems, McDaniel said the pension problems will not be fixed in this legislative session, adding that he hopes it will be fixed “in our generation.”
McGarvey agreed and added that all goals discussed in the KTRS work group had a 30 year timeline because of the realities of the massively underfunded systems.
The panelists all agreed that the issues need to be solved in order to free up funds for other important initiatives all Kentuckians want and need.
On other budget issues, McDaniel said there may need to be changes to Medicaid in order for the program to take up less of the budget and the bill begins to come due for our portion of Medicaid expansion. McDaniel also said there needs to be a hard look taken at higher education as well to make sure students are coming out of school in a reasonable amount of time without a ton of debt.