Lexington Herald-Leader, Nov. 19, 2015
Kentucky state pensions fall to 19 percent funded
By John Cheeves
The public pension fund that covers about 120,000 state government workers and retirees continued its rapid decline in Fiscal Year 2015, ending with only 19 percent of the assets it’s expected to need to pay for its future liabilities.
The total pension and insurance liability of the Kentucky Retirement Systems stood at $35.8 billion on June 30. KRS had $16.1 billion in assets, or just 45 percent of what it will need.
The grim news was presented Thursday to the audit committee of the KRS board of trustees. KRS oversees separate pension and insurance funds for state and local government employees and state police.
“This wasn’t unexpected. Nobody’s happy with it, but we knew it was coming,” said Mike Cherry, a KRS trustee and former Democratic state representative from Princeton.
No pension fund is in worse shape than the $2.3 billion fund covering most state workers. Since 2004, due to inadequate contributions by the state, the recession and weak investment returns, the funding level for the Kentucky Employees Retirement System’s non-hazardous fund has fallen from 85 percent to 21 percent last year.
The state workers’ pension fund is expected to fall to 15 percent by 2020 and stay there for five years before beginning a slow recovery over the next decade, according to an actuarial study issued in May. That assumes the General Assembly honors its recent commitment to fully fund state pensions, and that investment returns will be as strong as expected — two big ifs, some state retirees fear.
“They’re worried. I mean, that’s the best way to describe it. They have faith the checks are going to keep coming, but they are worried about it,” said Larry Totten, a member of Kentucky Public Retirees, which monitors the pension fund.
The $6.4 billion pension fund for most local government employees stood at 60 percent funded on June 30. The $167 million pension fund for Kentucky State Police stood at 33 percent funded, raising its own viability concerns.