Kentucky’s Pension Challenges: Opportunities for Real Reform
The funding level of Kentucky’s public employee retirement systems has declined every year since 2000. Though the state’s pension plans collectively ran a surplus as recently as 2002, by 2011 they had on hand just 53 percent of the assets necessary to meet their long-term pension obligations for state and local government employees as well as teachers.
This rapid descent occurred despite the significant sums Kentucky has spent recently to cover these obligations. About $1 billion of taxpayer funds went into the five Kentucky Retirement System plans in 2011 alone for both pensions and retiree health care. That’s more than22 percent of payroll for members of those pension plans. In 2031, unless current policies are changed, the annual pension bill to taxpayers will reach $3.8 billion, which will equal over 42 percent of payroll.