Op-ed: Protect the pensions of Kentucky's local government workers
Not all pension systems are the same
7:30 AM, Oct 12, 2017
This op-ed was signed by the mayors of 14 cities and towns in Kenton County: Daniel Bell, Taylor Mill; Jude Hehman, Fort Mitchell; Marty Lenhof, Elsmere; Joe Meyer, Covington; Chris Reinersman, Independence; Dave Hatter, Fort Wright; Butch Callery, Villa Hills; Paul Meier, Crestview Hills; Dave Jansing, Lakeside Park; Ken Wynn, Ludlow; Matt Mattone, Park Hills; Lou Hartfiel, Crescent Springs; John Link, Edgewood; Tyson Hermes, Erlanger.
We all hope to retire some day with enough income to maintain a modest lifestyle.
Maybe you have private investments, have paid into Social Security or have a pension. Whatever your plan for retirement, imagine your concern if that future was threatened.
That’s what city, county and school employees invested in Kentucky's County Employees Retirement System (CERS) now face. The state’s pension crisis could hurt or destroy their retirement plans, despite the fact they’ve paid into the system every year as required.
It’s not a promising picture.
Governor Bevin and members of the state legislature are working to draft pension reform for the state. We agree it is needed and admire the governor for taking on what has been a long overdue overhaul.
But not all pension systems in Kentucky have suffered the same neglect and not all need the same treatment. Employers who pay into CERS have always paid what was required, and the state appropriates no money directly to the CERS actuarially required contribution (ARC). Local tax dollars are put into it, and employers in the system and employees have always played by the rules.
The same cannot be said for the state.
Mismanagement at the Kentucky Retirement Systems (KRS) has led to problems state lawmakers are now struggling to fix. That organization manages the Kentucky Employees Retirement System (KERS), the worst-funded in the nation, and CERS, which is funded at a much higher level. The county employee system has 73 percent of the assets managed by KRS and 63 percent of the membership. it pays 63 percent of KRS administrative expenses, which total a whopping $22 million – a much higher per person cost than other systems in Kentucky that are managed by their own boards.
Even though a majority of the money in the system belongs to members of the county system, they only have six of the 17 seats on the KRS Board of Trustees.
Employer and employee groups in the county system say it is time to form a CERS Board of Trustees to ensure promises made to employees are kept and local tax dollars are managed properly.
A coalition of 25 groups are calling on the legislature to allow CERS to separate from KRS. Separation would create a new nine-member CERS board that would be made of three people with 10 or more years of retirement management experience, three people with 10 or more years of investment experience and three people elected by CERS members.
The new board would be free of political appointees, ensuring it is isolated from politics regardless of future administrations.
You may be surprised to learn who is in the county system and how much they earn in retirement. Nonhazardous employees include school bus drivers, school cafeteria workers and public works employees. These nonhazardous employees earn an average of $11,000 a year upon retirement. Hazardous duty employees, who pay more into the system, include your local police officers and firefighters. They earn an average of $25,000 a year after retirement.
These are not high-earning positions, and we owe it to the public servants who served our communities to ensure the promises made to them are kept.
We are calling on Governor Bevin and the legislature to include separation in any pension bill that goes before a special session this fall. It is the right thing to do for the CERS employers and employees who played by the rules and put their faith in a Kentucky Retirement Systems that let them down. Let local officials have local control of local tax dollars. It is time to #freeCERS.