Movement to separate County Employees Retirement System from KRS picks up bipartisan support from two lawmakers during well-attended western Kentucky forum on the issue

Paducah Sun, Aug. 30, 2017

Local legislators support severing state's stumbling pension systems


Two state legislators from Paducah -- Republican Sen. Danny Carroll and Democratic Rep. Gerald Watkins -- pledged support Tuesday for Senate Bill 226, a measure seeking significant reform of Kentucky's ailing public pension system.

The legislators addressed about 200 people, many of them public employees, during a forum at the Robert Cherry Civic Center.

The discussion centered on the primary goal of Bill 226 -- severing the "fully functioning" County Employees Retirement System from Kentucky Retirement Systems, which faces a $33 billion shortfall and potential insolvency within five years.

CERS has about 229,000 members, and its assets make up $8.9 billion, or 73 percent, of Kentucky Retirement. The Paducah forum, part of a series of outreach events across the state, came a day after a state-funded audit report called for drastic pension changes, including payment cuts and freezing benefits.

"I was just appalled," Watkins said of recommendations from PFM Group. "I am not going to support any of those. … I think they're outrageous and ridiculous.

"We don't pay our employees as much as we should or as much as they deserve. … It's the benefits and the pension that have allowed us to recruit top-notch people like we have. When we take that away from them, we're gonna have a really hard time recruiting. The governor is going to have to come up with a different plan, as far as I'm concerned."

Carroll backs divorcing CERS from Kentucky Retirement, but was less direct than his legislative colleague. He advocates a "balanced approach" to resolving the pension crisis.

"These are basic recommendations from a third-party firm, so whatever is going to be proposed, I think that just gives us a base of information to draw from, some facts and figures," he said. "… Make sure that you understand we're a long way from being at the end of this process and having anything proposed at all."

Carroll said legislators and stakeholders first need to understand the "impact to the entire system" by removing CERS, though it's "really difficult to make the same rules for a pension system that's totally failing (Kentucky Retirement) and then one within that, that seems on the verge of recovery (CERS)."

"We all have an obligation," he said. "We hear a lot, 'We are Kentucky.' I don't think this should be any exception. I think we need to bond together, and we need to take a holistic approach with this and everyone take responsibility for fixing this problem."

Bill 226 emerged from this year's General Assembly and had significant support, but was tabled so it could be considered in a special session later this year.

Bryanna Carroll, governmental affairs manager of the Kentucky League of Cities, the organizer of Tuesday's forum, said CERS has seen upward growth and is on track to be fully funded. Bill 226, she said, ensures the positive trajectory.

Separating from Kentucky Retirement, she added, would also allow CERS to have its own board. It currently has six representatives on the 17-member Kentucky Retirement board.

"We want to make sure we are isolated from politics," the KLC leader said.

She summarized the KLC's stance on Bill 226:

"We talk about how this state needs to become more business friendly. Well, in the business world, if you're not happy with your employee or a contractor, you're going to fire them, and you're going to move on and pay someone else.

"I don't think any of us in CERS wants to continue paying the Kentucky Retirement Systems."

Audience members Tuesday included McCracken County Judge-Executive Bob Leeper, County Commissioner Jerry Beyer, and numerous uniformed police and firefighters. The crowd was encouraged to contact local legislators and "urge them to sustain and separate CERS."

A coalition of 24 groups is advocating for CERS separation, Bryanna Carroll said. Representatives from the Kentucky Association of Counties, Kentucky State Fraternal Order of Police and the Kentucky Professional Firefighters Association spoke Tuesday, endorsing the bill.

"It's our money, it's our plan," said Joe Baer, president of the firefighters association. "Let us manage it the way we see fit."

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