KY Policy Blog

Additional Contribution for Retiree Health Benefits Is an Unnecessary Wage Cut

By Jason Bailey
October 24, 2017

The state’s proposed framework for pension legislation would require public employees to pay three percent more of their salaries toward retiree health benefits, the effect of which is the same as a three percent cut in wages. However, Kentucky’s retiree health plans are much better funded than most similar plans around the country, and the resources available for the plans are growing rapidly without the need for extra contributions from public employees who are already undercompensated.

The new contribution will cut wages by approximately $158 million annually for state workers read more

Supplemental Security Income is the “Assistance of Last Resort” for Kentucky’s Most Vulnerable

By Dustin Pugel
October 24, 2017

Supplemental Security Income (SSI), similar to Social Security Disability Insurance, provides a vital lifeline to blind, disabled and aged Kentuckians. Being a means-tested program, however, SSI is specifically designed for those with extremely little means. Far from some claims it is an ever-expanding program designed to create dependency, it is targeted to offer a small but critical benefit only to those who have nowhere else to turn, and encourages work among those who can. Because of the dangerously fragile position these beneficiaries are in, the Social Security Administration refers to read more

Pension Framework Makes Harsh Benefit Cuts, Adds Costs Without New Revenue

By Jason Bailey
October 18, 2017

The governor and legislative leaders released a framework today that makes substantial cuts to pension benefits for current workers, new employees and even retired teachers. It includes a shift to a 401k-type defined contribution (DC) system for future employees that is no cheaper than the current pension plan but will reduce retirement security and make it harder to attract and retain a skilled workforce. In addition, the framework calls for big new contributions to the plans without any new tax revenue to make that possible.

Major aspects of the proposal read more

Social Security Disability Insurance Works for Vulnerable Kentuckians

By Dustin Pugel
October 13, 2017

There are many misconceptions about Social Security Disability Insurance (DI). Despite recent arguments that DI is a hindrance to people’s wellbeing and the commonwealth’s economy, it is instead a vital lifeline for Kentuckians who, after working most of their lives, have their careers cut short due to a severe disability.

Natural population changes, not “culture,” caused rise in Disability Insurance

While some argue the considerable increase in DI beneficiaries in Kentucky is the result of a deficient culture that doesn’t value work, the data does not support this.  The rise read more

Kentucky Will Face Transition Costs If It Switches to 401ks

By Jason Bailey
October 3, 2017

Proponents are claiming Kentucky will face no transition costs from shutting down its defined benefit (DB) pension plans and moving employees into 401k-type defined contribution (DC) plans. That assertion ignores why there are transition costs from closing a plan.

DB plans are pre-funded, as the governor’s staff recently noted in an email to the General Assembly that cited an article from the Reason Foundation. Being pre-funded means DB plans are not designed for new workers to directly pay for the benefits of retired workers. Looking at that fact alone, one read more

Decline of Private Sector Defined Benefit Plans No Model for Public Plans

By Jason Bailey
September 20, 2017

Calls to end Kentucky’s defined benefit (DB) public pension plans often refer to the move away from DB plans in the private sector and suggest the public sector should follow suit and become more “modern.” But along with the harm to private employees that has accompanied this trend, industry and government are apples and oranges when it comes to pensions. The decline in private sector plans results from increased regulation as well as economic changes and other differences that do not apply to public sector plans.

Decline hasn’t spread to read more

Proposed 401ks Cost More Than Kentucky’s Existing Pension Plans

By Jason Bailey
September 6, 2017

The 401k-type defined contribution (DC) plans proposed by PFM in their final report would cost more than Kentucky’s existing defined benefit (DB) plans, according to data from PFM itself and the systems’ actuaries. Under a switch, the state would be making bigger contributions for a plan that reduces the retirement security of its workers. That hardly makes it a solution to the state’s pension funding challenges.

The cost of the DC plan is higher in part because the existing pension plan for new employees is already inexpensive if funded on read more

Lack of Jobs and Wage Growth Still Hurts Kentuckians this Labor Day

By Anna Baumann
September 1, 2017

Labor Day is a good time to reflect on the state of working Kentucky. This year, as the economy continues a long recovery and state and federal decision makers debate policies that could impact progress, it is important to acknowledge we are not yet in a full employment economy that substantially improves Kentuckians’ standard of living.

We have a long way to go to full employment.

The most recent monthly jobs update from the Bureau of Labor Statistics (BLS) shows jobs are continuing to grow steadily in Kentucky as they read more

Clawback of Cost of Living Adjustments Would Be Major Hit to Retiree Checks

By Jason Bailey
August 30, 2017

The Bevin administration’s consultant recommends a massive cut to many retirees’ incomes by rolling back past cost of living adjustments (COLAs) — a proposal that could reduce pension checks by as much as 32 percent.

The plan in PFM’s report would claw back COLAs earned between 1996 and 2012 for those receiving pensions in all of the plans, including state and local workers, teachers and police.  For Kentucky Retirement Systems (KRS) retirees, that means their checks could be as much as 32 percent smaller for those who retired before 1996 read more

PFM Report Uses Exaggerated Claims to Justify Harsh, Counterproductive Cuts

By Jason Bailey
August 28, 2017

The final report from the state’s pension consultant PFM uses exaggerated claims about the condition of all of the state’s pension plans to justify harsh and ultimately counterproductive cuts to retirees, current workers and future employees.

PFM bases its recommendations on claims that existing actuarial assumptions must be altered immediately and dramatically for all of the state’s pension plans. Those changes add $1.8 billion to employer contributions in 2019 above what they would otherwise be.  But while the depleted state of the Kentucky Employees Retirement System (KERS) non-hazardous plan merits read more