Franklin County

Beshear proposes spending more on state worker benefits

FRANKFORT — State workers get no raise in Gov. Steve Beshear's proposed two-year budget, but he does call for spending big money on health care and retirement benefits.

Beshear proposed spending an extra $173 million to cover increased costs in the state's health insurance program for current employees.

Beshear also pledged Tuesday to increase payments to the Kentucky Retirement Systems by $92 million, as lawmakers promised in 2008.

The system, which covers 330,000 current and retired state and county employees, faces an unfunded liability of $16.6 billion, which means it has money to cover current retirees but could fall short in future decades.

In addition, Beshear proposed buttressing a shortfall in the teachers' retirement health care trust fund.

Lawmakers have borrowed in recent years more than $562 million from the Kentucky Teachers' Retirement System's pension fund to pay for health insurance benefits for retired teachers. Under Beshear's proposal, the money borrowed from the teachers' pension system would be repaid through a bond.

The plan is to refinance $476 million in loans, which would save the state about $96 million over 12 years.

Gary Harbin, the executive secretary of the Kentucky Teachers' Retirement System, which has been pushing for a change in the way that retired teachers pay for health insurance, said Tuesday night that he could not comment on Beshear's proposal until Wednesday.

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