Keep promises to state workers

Around the nation, state and city governments are struggling to meet the obligations of pension plans for public employees.

Kentucky is no exception. The unfunded liabilities of its various pension programs have been making headlines for years.

They've even spurred the legislature to action a couple of times, most recently in 2008 when lawmakers changed the retirement rules for new hires and vowed to phase in full funding of the annual actuarial recommendation for the state workers' retirement plan by 2019.

But the payoff from those actions won't be felt for years, while the unfunded liability problem exists today. And that has at least one lawmaker, Republican Sen. Damon Thayer of Georgetown, broaching the possibility of emulating Colorado and Minnesota, two states trying to cut benefits for employees and retirees.

There could be some discussion of that subject at Thursday's Program Review and Investigations Committee meeting, when members of the panel get briefed on the results of the 2008 pension reforms.

But cutting benefits could prove more than a bit difficult since KRS 61.692 says the state has an "inviolable contract" with workers and retirees and that the benefits included in that contract "shall ... not be subject to reduction or impairment by alteration, amendment, or repeal." (The only exception applies to lawmakers or former lawmakers convicted of felonies related to their legislative duties, who would forfeit retirement benefits earned after 1993.)

That language doesn't seem to provide a whole lot of wiggle room for hacking away at the pensions already earned by state workers and retirees. Nor should it.

Promises were made to these people, perhaps not the wisest of promises, but promises nonetheless. And promises made by a government to its own employees should be promises kept.

After all, state workers didn't enact the laws that liberalized pension benefits beyond what common sense justified.

State egislators (some of whom remain in the General Assembly) performed that honor — sometimes after being lobbied by state workers, sometimes as a means of reducing the work force by encouraging early retirements, sometimes because it helped justify the even more liberal benefits they approved for their own pension plan.

And state workers aren't responsible for withholding funding from the retirement system. Their contributions to the pension plan came out of their paychecks like clockwork.

But the same cannot be said for the state's contributions. For the last 20 years or so, lawmakers eager to have more cash to spend on favorite programs or projects have underfunded state workers' retirement plan by as much as hundreds of millions of dollars a year — a circumstance that accounts for a significant chunk of the plan's unfunded liability.

Since Kentucky's pension problems were created in large part by lawmakers who were too generous with benefits and too stingy with funding, it is incumbent on the General Assembly to make the tough choices that can put the retirement system on the road to financial stability. But it would be unfortunate to pave that road with broken promises.