Spectrum News Pure Politics  – Public Pension Oversight Committee hears funding requests for next biennium

FRANKFORT – Committee members heard from the directors of the three major state pensions, Kentucky Retirement System (KRS), Kentucky Teachers’ Retirement System (KTRS) and Judicial Form Retirement System (KJFRS) at the Public Pension Oversight Board meeting on Monday, to find our what is needed to fund the systems during the next biennium, and got an earful from a retired Frankfort EMT and firefighter.

Beau Barnes, Executive Director of the Teachers’ Retirement System told members of the committee that the total amount requested in the biennium budget including debt service is $1.248 billion for FY 2019 and $1.2 billion for FY 2020.

Barnes told legislators that one bright spot in KTRS has been an uptick in investment returns.

Barnes said that the 15.37 percent return over 1-year on gross investment returns ranks in the top 8 percent in the nation, while the 3-year return of 6.3 percent ranks in the top 11 percent. In addition, the 5-year return of 10.1 percent is in the top 13 percent nationally, and the 10-year return of 6.3 percent ranks in the top 9 percent.

The 30-year compounded gross return is estimated to be 8.1 percent.

David Eager, Interim Executive Director of the KRS, told committee members that the total estimated employer contributions for FY 2019 will need to be $2.47 billion an increase of 62.86 percent from FY 2018 or $956 million and $2.47 billion for FY 2020.

Eager feels one positive is the fact that the KERS unfunded liability is beginning to flatten out.

Projections show the unfunded liability for KERS Non-Hazardous dropping from $13.45 billion in FY 2018 to $13.22 billion in FY 2019 and $12.96 billion in FY 2020.

“I can see the light at the end of the tunnel,” Eager said. “It’s a long way away and it’s going to take a lot of effort to get there, but for the very first time we’re going to see some projections of the unfunded flattening out , actually a little bit of a return so we’re not digging ourselves deeper.”

Donna Early, JFRS Executive Director told committee members that the preliminary request for the annual required contribution for the judicial retirement defined balance plan is $8.6 million a 34.36 percent decrease from the 2016-2018 biennium, and $94,000 for the hybrid cash balance plan, which represents a 35.64 percent increase.

The defined benefit plan for legislators retirement will require $1,100,000.00, a 53.87 percent decrease, and $26,000, a 23.81 percent increase for the last biennium.

Gregg Riggs, a retired chief officer with the Frankfort Fire Department chastised legislators for the fact that their pension are better funded than his, and the fact that they get a pension in the first place.

“Why is the legislator retirement and the judicial retirement treated differently than the people you work for,” Riggs asked. “My question is why do you even have a retirement, because by constitution, you are a part-time employee.”

Finding new money to fund the pension has been a challenge for legislators.

Last week, Rep. Dennis Keene, D-Wilder, and Rep. Rick Rand, D-Bedford, filed a bill to bring expanded gaming to the commonwealth and use the proceeds to fund pensions.

Co-chair Sen. Joe Bowen, R-Owenboro, says that’s an idea that he doesn’t agree with.

“I don’t think it’s the answer,” Bowen said. “I’m not a big fan of expanded gambling, I think that’s not a firm foundation to build a revenue stream. You got a lot of social ills which go along with it. That’s certainly not the answer.”

The next meeting of the Public Pension Oversight Board will take place in October at a date to be determined.

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