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EDITORIAL: Tough times lie ahead as we battle the pension problem

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By The Kentucky Standard Editorial Board

State Rep. Chad McCoy and state Sen. Jimmy Higdon met with local constituents who are affected by the pension crisis last week trying to ease their minds of what is and isn’t being considered in Kentucky’s pension woes. While neither legislator claimed to have the answers, they did agree that we have an obligation to deliver on our promises to teachers and other public employees.

Kentucky’s pensions are clearly the worst funded of any state according to a Standard & Poor report last September. According to the study, only 37.4 percent of the funds needed to pay retirees’ obligation is secured and the underfunded pensions have been declared a crisis situation for Kentucky.

So exactly how did we get into such a big mess? Over the past 20 years or so, governors and state legislators did not appropriately fund pensions, they simply continued to kick the proverbial can down the road so someone else would have to deal with it. Then the Great Recession hit, causing big losses in investment income, plummeting us into a crisis situation that Gov. Matt Bevin and current state legislators are trying to wrap their arms around.

Tough times are ahead as the state and local municipalities face uncertainties about how to keep the state pension fund solvent. Retired and working teachers are sitting on pins and needles awaiting the fate of their retirement benefits. It’s very clear to everyone that there is no silver bullet to solving the state’s pension crisis. It’s going to take crafting a mixture of funding sources to pay off the massive debt and potential cuts to existing state-funded programs. While the governor and state legislators have said tax reform, expanded gambling and medical marijuana are being considered — but not as a solution to funding pensions — all new funding options have to be considered to get us out of this mess.

It appears from most sources that the benefits of current retirees are safe, but whether the future benefits for active teachers and government workers will be reduced remains to be seen. And most agree that moving forward, we have to consider pension reform for future retirees, like moving government employees to 401k plans, much like what private sector employers have gone to.

Anticipation and anxiety are warranted among all stakeholders, who include public retirees, current teachers, government workers and taxpayers like you. While we face the challenge of meeting our obligations, any and all solutions will have a profound impact on us all.