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Lawmakers: state pensions in peril

FRANKFORT — Less than a year after revamping the state employee pension system, the top two legislative leaders say deep losses in the stock market this year might necessitate more changes to the system for future employees.

But the head of a state workers' group and at least one legislator said they would fight any changes to benefits for new hires.

Lee Jackson, president of the Kentucky Association of State Employees, said his 3,000 members would "strongly oppose such a move."

"We went through that last year in a legislative session, and we made enough concessions then," Jackson said.

Meanwhile, Rep. Derrick Graham, a Frankfort Democrat who represents thousands of state workers, noted that lawmakers should honor the commitment they made last summer to fully fund the ailing pension system over the next 20 years.

It currently has about a $30 billion shortfall.

"I am going to fight it like hell," he said. "I'll be disappointed with anything less than what we agreed to last year."

Rep. Bill Farmer, R-Lexing ton, said changing benefits for new hires might be politically impossible.

"I don't think we're ready to handle that," he said. "There are a whole lot of people in the system right now with a certain level of benefits."

With only two working days left in the 2009 General Assembly, it's too late to take up the issue in this session. But Senate President David Williams and House Speaker Greg Stumbo said the General Assembly is likely to consider the matter over the next year.

Their comments came during their weekly Friday news conference in the Capitol.

Williams, R-Burkesville, said the Beshear administration and the legislature need "to come to grips with the fact that we have a pension plan that we cannot allow people to continue to enter with the level of benefits that they have now."

"It is out of touch with what is happening with the private sector. It is a pension plan that cannot be sustained as far as new employees."

Asked if he will push for reductions in benefits for new state hires, Williams said, "For new employees, we need to have a different pension plan."

Williams criticized KASE leader Jackson's opposition to a review of the state pension plan.

"Doesn't he understand the economic times we're living in?" asked Williams.

Stumbo, D-Prestonsburg, said the legislature will have to review the pension plan for new hires because of the troubled economy.

He said "the solution that we thought was corrected" in a special legislative session last year is likely to be revisited.

"We need to think about long-term strategies," Stumbo said. "It's going to take a rethinking of the funding mechanism."