Politics & Government

‘We are tethered to the Titanic.’ Kentucky’s county pension system seeks to split from state.

The Kentucky Association of Counties and the Kentucky League of Cities don’t want Gov. Matt Bevin or the Kentucky General Assembly to mess with the well-funded, solvent state County Employees Retirement System.

The two organizations especially don’t want the state to take money from the county retirement system, which represents about 75 percent of state pension system assets, to fix the more than $30 billion mess in state retirees’ pensions, according to state officials.

“It will be over our dead bodies if they take CERS money to shore up the system,” J.D. Chaney, deputy executive director for Kentucky League of Cities, said Wednesday at the December board of directors meeting of the Barren River Area Development District in Bowling Green.

The Barren River district, in a departure from previous years, hosted Chaney and Shellie Hampton, director of governmental relations for KACo, rather than the usual year-end meeting with local state House and Senate lawmakers to obtain insight about the 2017 legislative session.

Both Chaney and Hampton said the underfunding and structural problems of the Kentucky Retirement System could be taken up in a special session in 2017. The regular session is a short one.

Since 2013, when Senate Bill 2 passed, the county retirement system has seen its funding ratio increase and employer contributions trend downward, while the Kentucky Employees Retirement Systems has had a decrease in its funding ratio, the League of Cities noted in a position paper distributed to local officials.

“KERS is now the worst-funded system in the country,” the white paper stated.

That fact is not lost on Chaney.

“We are tethered to the Titanic. We have to break that chain,” Chaney said. “We are propping that system up.”

KACo and the League of Cities would like to see the county system separated from the Kentucky Retirement System. Hampton said promises have been made to county employees, and they need to be kept.

“It is an inviolate contract,” she said.

That contract could be challenged as state officials work to construct a new approach to pensions.

Chaney said Bevin might oppose the proposed separation of the county system. He’s awaiting the results of pension system studies being finalized.

“It may end up being a bit of a debate within the (Bevin) administration,” Chaney said.

Hampton said work also continues on a large piece of pension legislation to be unveiled during the regular 2017 session in February, when the work for the short session of 30 days begins. The special session is expected to occur later in the year.

Hampton and Chaney said Republican control of the state House for the first time in nearly a century has changed prospects for repeal of the prevailing-wage law and right-to-work legislation. Both are predicted to pass this time after dying year after year in a Democrat-controlled state House.

“They are trying to manage expectations,” Hampton said of the new GOP House leadership. “There is electricity in the air.”

Work is also proceeding on a home-rule bill that would result in a state constitutional amendment before voters in 2018 that could lead to more local taxation options. Feedback thus far from the GOP leadership is that a constitutional amendment won’t be tackled in 2017, Hampton said.

Hampton said the GOP House leadership’s selection of state Rep. Michael Meredith, R-Brownsville, to chair the Local Government Committee is a good one.

“He is an advocate for local government and local control,” Hampton said.

One place where the county and city lobbying groups might part company is a funding proposal for road aid.

Chaney said that currently, county governments get the lion’s share of road funding — about 80 percent — and cities get about 15 percent. The KLC board is advancing a proposal to change the current formula so county governments would receive about 65 percent and cities about 35 percent.

“There hasn’t been a lot of traction on changing the (road aid) formula,” he said. Opposition to the League of Cities plan is expected from KACo.