A bill to reform Kentucky’s pensions by providing greater transparency for taxpayers was halted after it failed to make it to the floor of the state’s House of Representatives.
After being approved by the state’s Senate and a state House of Representatives committee, Senate Bill 2 did not receive consideration by the full assembly before the legislative session ended in April.
SB 2, sponsored by state Sen. Joe Bowen (R-Owensboro), would have required the state government’s public pension program to disclose fees and contracts for goods and services purchased by the pension boards. The bill would have also made appointment of trustees and executive directors subject to confirmation by lawmakers.
‘People Want Transparency’
Bowen says the proposed reforms would have helped relieve taxpayers’ concerns about state pensions and make pension program managers more accountable to the people funding those plans.
“Unfortunately, the transparency bill did not make it through the process,” Bowen said. “People want transparency. You know, when you’ve got a $30 billion to $40 billion pension liability, and you don’t have transparency, people are concerned. They want to know what is going on. They want to know what these investments are, what the contracts look like, what the fees are.”
Budget Gimmickry Found
Sheila Weinberg, founder and chief executive officer of Truth in Accounting, a nonprofit government watchdog organization, says her group’s analysis of Kentucky’s finances indicates the problem is worse than previously thought.
“What we found is they are in a $41.5 billion financial hole, and most of that, but not all of it, relates to pensions,” Weinberg said. “We calculated that they have unfunded pension benefits of $33.5 billion. Using a holistic approach, we calculate that they need $41.5 billion to pay their unfunded bills and decrease their pensions and retiree health care liabilities, which works out to be about $33,700 [per person in the state].”
Hiding the Costs
Weinberg says the state government is still concealing the full cost of the pension system from Kentucky taxpayers.
“The good news is most of state’s $33.5 billion unfunded pension debt is finally reported on the state’s balance sheet,” Weinberg said. “The bad news is because the state uses the pension plans’ 2014 data, instead of 2015, the state is still hiding $3.8 billion of pension debt. In addition, state officials are also hiding $1.3 billion of retiree health care benefit [obligations].”
Andrea Dillon ([email protected]) writes from Holly Springs, North Carolina.