Herald-Leader Editorial

Pension fix needs money and more transparency

Where's the funding for pension fix?

November 27, 2012 

If you think of the legislative task force studying pension reform for the past several months as a student completing a homework assignment, the report the panel produced a week ago would get a grade of "Incomplete" because one very big question went unanswered and one smaller but still important issue went completely unaddressed.

As might be expected, the big question involves the 900-pound elephant that's been tromping around the Capitol for the last decade or so: money. More specifically, the lack of money.

Perhaps the most important of the report's recommendations is to start fully funding the actuarially recommended contribution (ARC) to the financially troubled Kentucky Employees Retirement System in the next budget cycle, which begins July 1, 2014.

Since the General Assembly's failure to fully fund the ARC for much of the past two decades is one of the more significant reasons KERS is now financially troubled, a proposal for lawmakers to return to the path of fiscal sanity posthaste not only is welcome but also is a must for any real pension reform.

But the question remains: How will legislators come up with the extra $327 million? The task force couldn't agree on an answer. The panel's co-chairmen, Sen. Damon Thayer and Rep. Mike Cherry, said Gov. Steve Beshear and the full General Assembly must fill in this particular blank.

Politely stated, this was a lame excuse and does not bode well for the passage of any significant reform. In essence, this task force was the General Assembly in microcosm. If it couldn't live up to its responsibility on the money issue, there's little reason to expect all 138 state lawmakers to do any better.

While the money question just went unanswered, the issue of transparency in individual pension benefits was totally ignored. The vast majority of people receiving pension benefits from the state's multiple plans were public employees whose salaries were public records when they were still working. There is no reason their pension benefits, built on contributions of public dollars from the public agencies they worked for and their own public-funded salaries should not be public records as well.

And the recent flap over lawmakers being able to double or triple their legislative pensions by working as little as three years elsewhere in the public sector provides an excellent example of why public pensions should be public records. These lawmakers are not the only ones who have gamed the system. Over the years, many state and local government workers have built up multiple pensions by retiring and returning to work as "double dippers." Then, there are the lavish pensions former executives of non-profits are collecting from the state pension plan even though the non-profits are not really government agencies.

These are all valid reasons benefits paid out by public pensions should be open records. It's the only way the public can see how the system has been gamed, who's been doing the gaming and how much it costs.

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