Pension gravy could ooze all over other vital services

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By Jim Waters

It doesn’t take more than a cursory glance at Kentucky’s benefit policies for public workers to understand why 4,000 people apply for state jobs each month. After all, where else can you:

  • Get a guaranteed pension and a lifetime of health-care benefits for you and your spouse after a career full of 40-hour paychecks for 37.5 hour work weeks, 11.5 holidays a year, one fully day off (paid) to vote during election years and two full days off (paid) to donate blood each year?
  • Accumulate months and years of sick leave and up to 240 hours, or more than six weeks, of “comp time” to greatly enrich your retirement benefits?
  • Find this kind of job security: Only 0.004 percent of Kentucky’s workforce of 30,361 people got fired during Fiscal Year 2007?
  • Go 11 years without an increase in the amount coming out of your own pocket for health insurance while, according to the Robert Wood Johnson Foundation, employees nationwide are paying an average 30 percent more this year for coverage than they did in 2001?
  • Get pensions and health-care benefits that are, from the day you’re hired, guaranteed for a lifetime – even if there’s an economic earthquake and the market tanks?
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These are all great benefits … if you can afford them.

But as the second of a four-part series of Bluegrass Institute reports on the state’s pension system indicates, not only is Frankfort behind on current pension obligations, the hole keeps getting deeper. Between 2000 and 2010, the commonwealth’s unfunded pension liability grew by 3,000 percent – from less than $960 million, a manageable amount – to more than $30 billion currently.

While the governor talks gambling and Frankfort fights over attempts to protect Congressman Ben Chandler’s political career by redrawing lines to lessen the competitiveness of Kentucky’s Sixth District, the commonwealth’s pension predicament is the white elephant in the room that’s raising its trunk and howling.

Few are listening, even though Lowell Reese, the author of the institute’s report and a former state Chamber of Commerce executive, warns the pension crisis “has become a societal issue,” and that “the standard of living of all Kentuckians is at stake.”

Reese estimates at least $23 billion is needed to nurse the state’s pension system back to even moderate health – a tall order for a state whose entire annual budget is $9 billion.

He blames legislators for exacerbating the pension systems’ problems by amending pension policies, using at least “41 moving parts that can be wiggled, increasing benefits” as a vote-peddling tool.

Legislators could make some decisions right now that might be tough but would give them some latitude – like, say, placing all new hires on a different plan that would require them to share more of the cost of their own pension and health-care costs. Or, they can wait until much-more unpleasant decisions are forced upon them.

Considering Kentucky’s public pensions are more protected by statutes and court rulings than the gold at Fort Knox ever was, tomorrow’s choices for lawmakers could force them to crowd out funds for essential government services like public safety in order to keep the state’s pension systems afloat.

The private sector found out a long time ago that too much pension gravy slows the train. So, companies made tough decisions based on limited choices: Change the way benefits are structured or send employees to unemployment lines and businesses to bankruptcy courts.

But state governments can’t file bankruptcy. So, 90 percent of state and local government workers nationwide still have the kind of pension benefits found in lah-lah land; only 24 percent of private-sector workers have such plans.

Who do you think is paying the fare?
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