After months of planning and closed-door negotiations, Gov. Matt Bevin and GOP legislative leaders on Wednesday released a plan they say begins to tackle Kentucky’s multibillion-dollar pension debt while honoring promises to retirees and public employees.
As expected the plan calls for transitioning most public employees from traditional pension plans to 401(k)-like plans – but it does so in a much more gradual way than recommended by the Bevin administration’s pension consultant.
New workers and teachers will go into 401(k)-like plans, but instead of immediately shifting current state and local government workers to 401(k)s, those workers would be able to remain in their current pension plans for 27 years.
Current teachers with 27 years of service also would be moved to the 401(k)-style savings plans. But their plans will be more generous than those of other public employees to compensate for the fact that teachers do not draw Social Security benefits.
To avoid a rush of teacher retirements, those teachers will be given an option of remaining in their current traditional pension plans for three additional years.
And both current and future workers in “hazardous duty” jobs like law enforcement would not go into the 401(k)-type plans. They would retain their current pension benefits instead.
The plan also would bring legislators, who have more generous benefits, into the retirement system of other state employees. And it would end the ability of teachers to use accumulated sick days to boost their pension benefits – but not until July 1, 2023.
And the plan would begin to pay for pensions under a new approach “that mandates hundreds of millions more into every retirement plan, making them healthier and solvent sooner,” a summary of the plan said.
“If you are a retiree, if you are working to be a retiree at some point, you should be rejoicing,” Bevin said. “... It guarantees by law that your pension is going to be funded. There will be no more kicking of the can down the road.”
Some immediate response to the plan questioned Bevin's statement that all promises have been kept.
"I think the plan includes some very harsh cuts to benefits," said Jason Bailey, executive director of the Kentucky Center for Economic Policy. Bailey said the handouts summarizing the plan say cost-of-living increases for teacher retirement benefits would be suspended for five years and that teachers and other public employees will have to pay more for health care benefits.
So, cops and firefighters get full benefits, but teachers and other state employees get benefit cuts and have to pay more into the system in order to fund it. The suspension of cost of living increases is pretty ridiculous.
Meanwhile, Bevin's too busy playing Good Cop, Bad Cop to actually get the plan signed into law.
Bevin has said all year that he would call a special legislative session in 2017 for lawmakers to pass a reform plan to set the state on course to pay off pension debts. Those debts are officially listed at more than $40 billion, but Bevin estimates them at more than $64 billion.
The plan released Wednesday is only an outline of the bill to be considered. And Bevin did not say when that session will begin.
“As soon as we are ready,” he said when asked when he will call the session. “There’s still a little ‘I’ dotting and ‘T’ crossing” before that announcement, Bevin said.
The plan is much friendlier to employees and retirees than many of the highly controversial recommendations offered in August in a report by the administration’s Philadelphia-based consultant – PFM Group. It does not, for instance, call for raising the retirement age for public employees or the clawing back of any benefits earned by current retirees.
“Nothing is changing for retirees," Bevin said. "They’re going to be getting everything they’re getting now.”
That's a lie, of course. But the devil is in the details, and not word of those details has been written yet.
We'll see.
Posts
No comments:
Post a Comment