FRANKFORT, Ky. (AP) – Gov. Ernie Fletcher will ask lawmakers to make an infusion of at least $50 million into the state’s shaky retirement systems for teachers and state employees.
The move is intended to head off a projected financial liability that could force the state to reduce retiree health benefits by 2013 and pension payments by 2021. Fletcher said the issue was raised repeatedly in town meetings he held across the state in recent weeks.
“The state made a promise to these employees and teachers and we must keep that promise,” Fletcher said. “As I traveled around the commonwealth gathering the thoughts of our citizens, honoring our commitments to the public employee pension systems was a high priority in almost every case.”
A coalition of advocacy groups had recommended that state officials address the problems in the Kentucky Teacher Retirement System and the Kentucky Employees Retirement Systems. The rising cost of health care in recent years has strained the systems.
Gary Harbin, executive secretary of the Kentucky Teacher Retirement System, said the legislature has been borrowing from the teachers’ pension plan to scotch the teachers’ medical benefits.
Harbin called that a serious situation that could undermine the security of teachers’ pensions. The pensions, he said, are especially important to teachers because they don’t pay into the Social Security system and don’t qualify for those benefits.
Kentucky Employees Retirement Systems has been receiving only about 60 percent of the money estimated necessary to pay for its future liabilities.
Fletcher said he is forming what he called the Blue Ribbon Commission on Public Employees Retirement Systems. He said he will ask the 23-member commission to find ways to eliminate the unfunded liabilities in retirement systems for state employees and teachers to ensure future employees have benefits.
Last year, the state put $24 million into the state’s retirement systems in an effort to help shore up finances, Fletcher said.
“My charge to this commission is not to propose changes to the benefits enjoyed by current retirees or promised to current employees and teachers,” Fletcher said. “We cannot and will not do that.”