Tuesday, June 19, 2007

Kentucky Pension Plan under Review for Possible Changes

The Louisville Courier-Journal reports a blue-ribbon commission studying the state's pension crisis will review the benefits contract with current employees and retirees, despite repeated assurances by elected officials that only the benefits of future employees were under scrutiny.

Courts across the country — including the Kentucky Supreme
Court — have given states little room to change what commonly are referred
to as "inviolable contracts" with public employees.

And some members of the Blue Ribbon Commission on Public Employees Retirement Systems wonder why the review is being undertaken.

"I think we have a pretty good understanding of what the contract should be already," said commission member Gary Harbin, executive secretary of the Kentucky Teachers' Retirement System. "We shouldn't be trying to find some way to make changes in those benefits."

As things stand now, state and local governments and school systems are nearly $12
billion short of meeting future pension obligations to their employees.

The concept of "inviolable contracts" means that retirement benefits in place when the state hires workers — including health-care benefits — cannot later be diminished for those workers.

John Farris, the commission's chairman, confirmed that an
attorney would examine the contract. But he said the purpose is not
to find a way to break the state's contractual promise to current employees
and retirees.

Farris, secretary of the Finance and Administration Cabinet, said the commission simply wants to ask an attorney questions such as whether the state could offer current employees a $10,000 pay increase in exchange for reduced retirement benefits.