Many employees of Kentucky state government are headed toward the exits as Gov. Matt Bevin and the General Assembly debate the possibility of sweeping cuts to their pension benefits to address a massive funding shortfall.
“I was just down at the Transportation Cabinet to present a citation to a lady who has 29 years of service to the state, and she has decided, based on what’s happening, that now is a good time for her to retire,” said state Rep. Derrick Graham, D-Frankfort.
“As I was talking to other people around the Transportation Cabinet building, I kept hearing the same thing,” Graham said. “If they can retire, they are retiring. All told, just in the group I was speaking with, we’re suddenly losing about 200 years worth of institutional knowledge about how to serve our people. It’s a real brain drain, a serious loss of experience.”
There were 684 retirements in August for state workers enrolled in the Kentucky Employees Retirement System, up 20 percent from August 2016. There were 37 retirements for state troopers enrolled in the State Police Retirement System, up from 8 in August 2016. Retirements being finalized for September also “will show a meaningful increase over 2016,” said Dave Eager, executive director at the Kentucky Retirement Systems.
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On its Facebook page, KRS asked state workers to be patient because it cannot handle the sudden demand to meet with retirement counselors that followed Monday’s release of a report by the PFM Group. That report recommended an end to defined-benefits pensions for state workers and school teachers in favor of less generous defined-contributions accounts; a raise in the retirement age to 65 for most workers; and the “clawback” of a previously awarded cost-of-living adjustment to some retirees that could reduce their future benefits by 25 percent.
“By Tuesday, our benefits team was inundated with requests for appointments,” KRS told its members on Facebook. “We understand that our members would like to come to Frankfort to meet with a retirement benefits counselor face to face. Unfortunately, due to the ongoing discussion about potential pension changes, our appointment availability is extremely limited. Simply put, KRS does not have the staff to meet with every member requesting appointments at this time.”
There hasn’t been a corresponding surge in teacher retirements, not with a new school year starting in August, according to the Teachers’ Retirement System of Kentucky. However, there recently has been a noticeable increase in the number of teachers visiting and calling the TRS office in Frankfort for information about retirement, said Robert “Beau” Barnes, the system’s deputy executive secretary and general counsel.
Among the roughly 31,000 people who work in the state’s executive branch — several thousand fewer then a decade ago, after many rounds of budget cuts — morale has been plummeting all summer, said David Smith, executive director of the Kentucky Association of State Employees.
“Everyone was waiting to see what was going to be in that consultant’s report, to see if it would be as bad as we all feared, and it was,” Smith said. “So if any of our people are near retirement, we’re telling them to go ahead and retire now, lock it in, and then you’ll have at least that level of legal protection when we take this to court because you’re a retiree. Call KRS now and make an appointment, get your paperwork going. If you’re still working when the pension changes are made, you might not necessarily have the same level of protection.”
“When I say you’re looking at a mass exodus, I mean it,” Smith said. “I’ve communicated with 300 or 400 members since that report came out Monday. And that’s just me personally. We have other people in our organization who are taking calls. We’re telling everyone, ‘Get ready to pull the pin.’”
In a Facebook Live chat with state employees on Monday, Bevin said that any changes he and lawmakers make to Kentucky’s pension plans would not include an “emergency clause,” so they would not take effect immediately upon his signing legislation into law. That would give state employees a few months to decide their best course of action under restructured retirement systems.
Bevin said he expects to call a special legislative session this fall to address the tens of billions of dollars owed by the states’ pension plans.
“I don’t see this going into effect until the top of the year, maybe, at the earliest,” Bevin said. “I would be remiss to try and pick the date. Maybe we wait until the end of the fiscal year, which is June 30. There’s been no determination on that yet.”
Nobody should feel forced into a “knee-jerk” response because of pension changes, Bevin added.
“We’re not going to pass anything that will cause a person to wish they had retired earlier as a result of it,” Bevin said. “We’re just not going to do it. Why cut off our nose to spite our face?”
But Smith said that’s exactly what the state government will be doing to itself if it strips workers of the pensions they expected when they took their jobs. Already, he said, most state workers have gone years without pay raises. Most are working harder than ever because budget cuts have depleted their ranks. And they get “beat up on” regularly by politicians and members of the public who see government as the enemy, he said.
The greatest recruitment tool the state has is its pension plan and a relatively early retirement age, Smith said.
“How do you propose to attract top talent now?” Smith asked. “Once your senior people have retired, and they will, if all you’re offering new people is a 401(k) account, a low salary and working until they’re 65, good luck with that. I’d rather go into the private sector where the money is at least a little better.”
“The state is already having a hard time hiring qualified corrections officers. You think this is going to help you hire more corrections officers?” he asked. “The same with state police officers. The same with probation and parole officers. The same with social workers. Why would anyone want to work for the state of Kentucky after this?”