Bluegrass Institute strikes a nerve with pension points
A recent Letter to the Editor in the Corbin Times-Tribune takes aim at The Bluegrass Institute's Jim Waters for his comments in a recent Bluegrass Beacon column discussing the Kentucky public pension crisis.
The column is based on a recent research report released by the institute, which can be read in its entirety here: "FUTURE SHOCK: Legislators stoking the coals on Kentucky's runaway pension train
"While the passion of the letter is respected, the fact is that it misses the larger issue.
The Bluegrass Institute does not advocate:
Revoking the pensions of current, active state workers. In fact, it's just the opposite. The institute often notes that the commonwealth not only has a legal obligation but a moral responsibility to honor contracts made with both current workers and retirees.
"Bashing" state workers. We have never blamed state workers for taking advantage of the benefits offered to them, whether it be days off or retirement plans. Our focus is on the fact that taxpayers can no longer afford to support such lavish pension plans, not the workers themselves who benefit from those plans.
The idea that state workers don't pay taxes.
The Bluegrass Institute does advocate and believe that:
The Kentucky state pension system in its current form is completely unsustainable. As a result, we must consider more modest benefit packages for new state workers hired in the future. Our report (available at the link below) estimates that the state could save more than $635,000 on each "mid-management" career employee by switching to a 401(k)-style retirement plan.
While state workers are indeed taxpayers whose taxes contribute to the pension system just like those without state jobs, the fact remains that the vast majority of the tax money that goes into the state retirement system fund comes from Kentuckians who are not state workers.
The unfunded liability for Kentucky's public pension system is $31 billion, not $19.2 billion as the authors of the letter claim. The pension deficit is documented in the annual reports supplied by the pension plans' managing agencies. It's their information, not ours.
The Bluegrass Institute agree with the letter's authors that the integrity of the public pension system needs to be protected. In fact, our argument is that the integrity of the system is threatened by the unfunded liability and unsustainable nature of the system as it exists. The system as it exists now also threatens the integrity of Kentucky's economic viability. Serious reforms are a must.