Bevin hid the financial analysis of his pension proposal. Beshear just released it.
Gov. Andy Beshear released a financial analysis Friday of a 2017 pension proposal that former Gov. Matt Bevin fought to keep out of the public eye.
The 65-page analysis shows that Bevin’s controversial pension overhaul plan — which sparked mass teacher protests in 2017 and contributed to Bevin’s ouster as governor — would have saved the state moneyin the short term but would have slowed the financial rebound of Kentucky’s most troubled pension system and cost the state more in the long run.
“It was absurd that it was suppressed all these years,” said Jim Carroll, the president of Kentucky Government Retirees. “We’re certainly grateful that Gov. Beshear released it.”
The actuarial analysis only applied to the Kentucky Retirement Systems, which oversees pension plans for most state and local government employees, but not teachers.
The proposal would have made sweeping cuts to retirement benefits, including a provision that would have stopped employees from accruing more pension benefits after working 27 years, moving them to a 401(k)-style plan instead. Bevin had hoped to call the legislature into special session to consider his plan, but it never happened and the legislature ended up crafting its own bill, which was later tossed by the Kentucky Supreme Court.
The actuaries who wrote the analysis said Bevin’s plan would have created an incentive for people to retire and start collecting pension benefits after 27 years, which would have put a burden on the system.
The bill would have lowered the unfunded liability in the state’s most troubled pension plan (Kentucky Employees Retirement System Non-Hazardous) by $377 million in its first three years, but the unfunded liability would have grown in later years and taken an additional four years to pay off.
The state’s payments into that pension plan would have been about $1.6 billion less over the first 24 years of Bevin’s plan, but after 30 years, the total cost to the state would be $2.1 billion more than the current plan, the analysis found.
The Bevin administration fought in court for years to prevent the analysis from being released. After losing in Franklin Circuit Court, the Bevin administration took their case to the Kentucky Court of Appeals, where the lawsuit remains.
Judge Philip Shepherd had previously revealed that Bevin’s plan would have delayed the system from reaching full funding by four additional years when he ruled against Bevin in Franklin Circuit Court.
“While the actuarial study of the governor’s proposal may be embarrassing to the administration in that it reveals substantial fiscal and economic problems with the governor’s proposal, the Open Records Act requires disclosure even if it causes ‘embarrassment to public officials or others,’” Shepherd wrote in his 2019 decision.
Republicans have super majorities in the House and Senate, but there has been little appetite to tackle pension reform the way Bevin had hoped. Now, with Beshear’s election, there is even less pressure to overhaul the pension system for state employees.
Beshear campaigned heavily against Bevin’s efforts to reform the pension system — particularly the teachers’ pension system — and hailed the release of the analysis as an opportunity for the public to “know the truth” about Bevin’s attempted reform.
“Today, less than two weeks into my administration, I turned over the documents and let employees and taxpayers know the truth – the proposed 2017 reforms would have cost the state more and forced out many more career employees,” Beshear said. “If we are truly going to solve the problems we face as a commonwealth, we must work together in an honest and open way.”
This story was originally published December 20, 2019 at 3:51 PM.
