Feb. 6, 2013 —
In Greek mythology, the “sword of Damocles” represents an impending disaster. It never goes away, constantly waiting to happen.
That analogy describes the pressure that is mounting for members of the General Assembly to deal with the state’s public pension crisis in the current legislative session.
The latest weight added to the flimsy string holding the legendary “sword” was put there last Thursday when Standard & Poor’s Ratings Services announced a downgrading of the state’s fiscal outlook because of unfunded pension liabilities, now estimated at $30 billion.
S&P revealed the revision from stable to negative and then confirmed its existing AA-minus credit rating for the state’s bonds.
To no one’s surprise, the S&P experts said the two negative responses reflected the financial community’s concern over the decline of pension funding levels and the likelihood that the decline would continue.
And, to make sure that no one misunderstood, the credit analyst from S&P pointed out that the state had consistently underfunded its post-retirement pension liabilities and likely doesn’t have the means to start fixing the problem.
The financial “fix” requires a commitment of at least $327 million in the next state budget starting July 1, 2014.
However, the first part of the “fix” should happen this year, lawmakers were told by a coalition of 50 of the state’s most powerful business groups, including the Kentucky Chamber of Commerce and the National Federation of Independent Businesses.
The retirement system for state employees has an unfunded liability of about $18 billion. Another $12 billion exists in the other pension plans for teachers, city and county employees and state police.
The problem was created by a combination of lower-than-expected returns on investments and the General Assembly’s failure to fund all of the state’s contributions each year.
A pension reform task force has recommended changes in how the retirement systems operate, including an end to automatic cost-of-living adjustment for current and future retirees.
The task force said new public employees should go into a plan more like a 401-K or other private pension approach.
Another group calling itself the Kentucky Public Pension Coalition and representing 19 employee and retiree organizations says persons most affected by changes in public pensions have not been sufficiently consulted on possible solutions.
In our view, the General Assembly should make necessary statutory changes this year to keep the problem from getting worse.
That would leave nearly a full year to find the money needed to start balancing the books and restoring the state’s credit rating.
Editorials
Public pensions now our ‘sword of Damocles’
- Editorials
-
-
Seizure of phone records insult to free press
Distrust of government secrecy has been elevated to an exceptional level with the disclosure the Justice Department covertly examined two months of Associated Press phone records to determine who leaked details to the AP about a foiled terrorist plot.
-
EKU Regents also lose touch with reality
We criticized Murray State University’s Board of Regents for not doing the public’s business openly regarding the future of President Randy Dunn. Then we criticized the University of Kentucky for its lack of transparency in responding to inquiries from the news media about issues in the College of Medicine. Today, we direct our criticism at Eastern Kentucky University Board of Regents for demoralizing an entire institution through the hiring of a new president.
-
Let citizens draw districts, not politicians
We say “amen” to our colleagues at the Lexington Herald-Leader who have called for a new method of realigning legislative districts to balance population changes from census to census.
-
Which Mitch will be on the ballot next year?
We seldom agree with his policies or his tactics but we make no secret of our admiration of Mitch McConnell’s political survival skills as the senior U. S. senator from Kentucky.
-
Farmer building new ‘Unforgettable’ label
University of Kentucky basketball fans who fondly remember “The Unforgettables,” the 1991-92 edition of the Wildcats, may need to edit those good memories.
-
Can Beshear solve Medicaid slow pay?
We’re trying to understand why Gov. Steve Beshear believes he is smarter than all 138 members of the General Assembly when it comes to Medicaid.
-
East Kentucky needs new game plan for coal
Politicians complaining about the so-called “war on coal” by the Obama Administration were painfully accurate, according to a new state report released last week.
-
Legislators barely avoided a failing grade
In our view, last minute heroics to save pension reform kept the 2013 Kentucky General Assembly from getting a failing grade on the short session which mercifully ended last week.
-
Carter Caves: Does the credit really matter?
The first two articles in our series on Carter Caves State Resort Park prompted positive and negative reader comments.
-
HB 1 a good start with special districts
Kentuckians haven’t had much to cheer about in the 2013 legislative session. It appears that some vital issues won’t be addressed in the final two days later this month.
- More Editorials Headlines
-
Seizure of phone records insult to free press
