Pension reform proposal offers opportunity to address growing pension crisis, Chamber President says
As a special session to tackle public pension reforms is expected in the coming weeks, policy groups discussed the proposal presented by the governor and legislative leaders and the details that will be debated before a final vote is taken.
KET’s Kentucky Tonight program hosted a show on pension reform Monday with Kentucky Chamber President and CEO Dave Adkisson, Kentucky Education President Stephanie Winkler, Kentucky Center for Economic Policy Executive Director Jason Bailey, and Dr. William Smith, member of the pension reform team for the Bluegrass Institute for Public Policy Solutions.
Kentucky Chamber President Adkisson pointed to the Chamber’s long history of advocating for pension reform for over a decade to avoid the current crisis situation the state faces with the woefully underfunded systems.
On the Chamber’s support of the pension reform proposal, Adkisson said that while the “Keeping the Promise” framework might not be what any of the groups on the panel would have come up with specifically, it is an opportunity to address the current crisis.
“There are thoughtful people in a room trying to balance the severe problem we are in, trying to be as fair as possible. It is going to be dramatic in terms of changing some things, and that’s always difficult for any of us. But I think it is a responsible product,” Adkisson said, noting that changes are likely to come to the plan before a final bill is voted on during a special session.
Many on the panel expressed concern about the changes coming to the teachers’ retirement system and the proposal to move all state employees into a 401k-style retirement system, arguing the benefits will not be competitive enough to attract talent or provide adequate benefit for a public employee upon retirement. Adkisson pointed to the fact that 401k-style plans are what the business community has used for years, and even some of the state’s largest universities have converted to a defined contribution, to great success. He stated that these plans provide the flexibility desired by many in the workforce, especially younger workers, as most people do not stay in one single job for 27 years anymore.
Adkisson noted the Kentucky Chamber supports tax reform that could bring in new revenue and make the state more competitive but pointed to the fact that while many are saying tax reform should be done with or before pension reforms, that is not the reality as the governor is planning to tackle modernization of the tax code at a later date. (Gov. Bevin discussed his plans for tax reform and a possible time frame in an exclusive interview with The Bottom Line that can be seen here.)
“This is a painful thing for Kentucky to have to go through. Each state is unique, there’s no doubt about it, we are in a deeper ditch. We’re in a ditch down there with Illinois,” Adkisson said, pointing to some harsher reforms other states have implemented in order to address their pension issues. “We think this is a thoughtful process by which we can start climbing out of that ditch and without taking it out on the backs of any one group.”