Get serious on fixing pensions; money needed to close shortfall

It's easy to see how a group of recently elected Republican members of the General Assembly could have been naive in thinking they could simply turn down the generous pension benefits that come with their new part-time jobs.

Much harder to believe is that more seasoned members of their caucus aren't playing politics in a proposal to change pension benefits for state employees while postponing the new taxes that will be needed to fill the existing shortfall.

We've said it before and we'll say it again: Pension reform is not complete without a plan for raising the money to make up the $12.5 billion shortfall.

A brief recap: State employees, present and past, are enrolled in a pension plan that guarantees certain retirement benefits. The fund that's supposed to pay those benefits has only about 44 percent of the money it needs.

A task force appointed to come up with solutions recommended a pension hybrid plan for new employees that would operate much like a private-sector 401(k) account but include a guarantee of a minimum 4 percent annual return on savings.

That could put the state on a much sounder basis for future employees.

As for the missing billions in the current plan, the task force recommended stepping up state contributions to the plan, beginning with adding $327 million to the $505 million contribution due in 2014, for a total of $832 million that year, a number that would grow to $1 billion by 2020.

And there it stopped. No recommendation on where that money would come from.

To understand the magnitude of these dollars, consider that the state spends $938 million annually on all state universities and community and technical colleges.

And there the Senate Republicans also stop. They are preparing a bill to alter the pension system in the future but punting until next year on how to come up with the missing money.

Legislators' pensions are in a separate, much smaller, system, which has more generous benefits and has been much better funded.

Several Republican candidates last year assailed that pension, and said they'd forego the pensions if elected but found out when they arrived in Frankfort that that's not an option — although it should be.

We encourage those who want to opt-out to push legislation this session giving them that choice.

Our major concern is that lawmakers are allowed to double or triple their pensions by working as little as three years elsewhere in the public sector. They should fix that, too.

Both systems lack transparency. Even though every taxpayer in Kentucky will contribute to paying those benefits, and public employee salaries are public information, we can only guess at retirement benefits based on what we know about years of service and other factors.

It's past time for real, lasting reform that addresses future benefits, is up-front about where the money to meet current obligations will come from, reins in the legislative system, and opens all public pensions to public scrutiny.