The business community would like to see pension reforms take shape that will honor the promises made to Kentucky’s state workers while also shoring up the plans for the future with structural changes for new hires. That was the message delivered to the Public Pension Oversight Board Monday by John Gohmann, Regional President of PNC Bank and Chair of the Kentucky Chamber’s Pension Task Force.
In his testimony about the pension crisis, Gohmann noted that Chamber has been speaking out publicly about the Kentucky’s public pension challenges for more than ten years because of the financial impact it has on all areas of the state’s spending, especially education.
Gohmann said the Chamber believes the best way to develop a clear and certain path forward is through a combination of additional financial investments in the retirement system and benefit changes that are legally sustainable.
“We wholeheartedly agree with the Governor’s statement that Kentucky must honor the promises made to public retirees—it is required as a matter of law and we are also ethically bound to do so,” Gohmann said. “The Chamber also believes it is important to offer competitive retirement benefits that help Kentucky recruit and retain quality teachers and other government employees. In our view, the Commonwealth’s interests are best served by devoting our time and resources to pension reforms that can win legislative approval and withstand a costly and time-consuming legal challenge that would, at best, delay needed reforms and could ultimately undo needed changes.”
With this in mind, Gohmann said the Chamber does advocate for the need for some structural changes in our retirement systems. Gohmann stated that the Chamber’s Pension Task Force, which he chairs, is currently working with Chamber members on specific recommendations and, once finalized, will share the information with the Public Pension Oversight Board.
Gohmann said the Chamber agrees with the Governor that additional revenue will be required to meet the Commonwealth’s financial obligations and added that tax reforms should focus on a tax system that improves Kentucky’s competitive position and provides for growth in revenue.
Other interest groups testifying at Monday’s meeting included Kentucky public retiree groups, police and firefighter groups, retired and current teacher representatives, local county and city groups, university representatives and more.
The common theme of the meeting dealt with honoring the promises made to state employees and the need for more revenue to find solutions to the financial issues faced by the state.
Kentucky Government Retirees representative Jim Carroll said the state has a moral and legal obligation to pay the retirement benefits and if that does not happen, they will “face fierce opposition.”
Many groups explained the struggle to recruit quality candidates for state jobs currently and expressed concerns that any changes to benefit structure could make it even more difficult to attract and retain employees.
Legislators concluded the meeting by thanking the groups bringing forward their concerns and suggestions and said they would take the next month to consider the public comments before moving ahead with reforms.
The next meeting of the Public Pension Oversight Board, scheduled for the end of July, is expected to see the reveal of the final phase of the audits of the state’s retirement systems. Recommendations for how to reform the pension plans is anticipated in that report.