On Thursday, Governor Matt Bevin spoke at the Local Issues Conference luncheon on the state pension problem. Bevin reminded the crowd that this is his first role in politics, and Kentucky’s pension crisis is exactly why he ran for governor.
Bevin asked the audience, “How do we make Kentucky the best version of itself?” He mentioned his vision for Kentucky to be the engineering and manufacturing hub of the world. But first, Bevin said Kentucky’s financial problems have to be fixed and the time is now to address them.
He asked for the public’s confidence as he said he has been dedicated to addressing the problem since before his campaign for governor. He said he could “ride out” his term, but he is “not going to be like everyone else before him.”
“What we’re doing has never been done,” Bevin said. He explained there has never been a system that has been so underfunded and has actually solved the problem. Therefore, this problem cannot be solved by copying someone else’s solution. He estimated Kentucky owes between $40-$80 billion in unfunded liability. Bevin reminded the crowd that simple solutions, such as meeting the Actuarial Required Contributions, will not be enough to fix the pension system.
Bevin acknowledged the opinions of those who believe and do not believe County Employees Retirement System (CERS) and Kentucky Employees Retirement System (KERS) should be separated, but assured elected leaders will come to a thoughtful decision on it. Bevin stated KERS is between 9% and 16% funded, and CERS is less than 50% funded, and said if it were a private company the IRS would have already taken over. Bevin said intently, “it is not going to get any better if we keep kicking the can down the road” and “time is not our ally.”
Addressing why Kentucky is in the current pension crisis, Bevin said, “What has happened with our pension systems was irresponsible & negligent. Those in charge knew better; it wasn’t that complicated.” He told the crowd two goals: first to fix the pension system and second to do it in a way that does not suffocate.
Bevin ended the speech with the reiterated statement, we are going to fix this “because we are Kentucky.”
In preparation for a special legislative session, Speaker of the House Jeff Hoover has called for a meeting of all state representatives in a closed session on Tuesday. Stay tuned on the Bottom Line for more news on the pension system as the special session draws near.