Bevin Administration: Pension analysis kept secret, for now
FRANKFORT, Ky. (AP) — Days after getting an unflattering analysis of his pension proposal, Republican Gov. Matt Bevin’s administration says it will to keep a similar report secret until lawmakers can make changes to the bill.
Kentucky has one of the country’s worst-funded public pension systems, and Bevin has vowed to change it. Last month, he presented a 505-page bill that would eventually shut the pension system down in favor of a 401(k)-style plan for state workers and public school teachers.
That bill could cost taxpayers an extra $4.4 billion over 20 years to fund retirement benefits for public school teachers, according to an analysis released last week — assuming the state legislature fully funds a system it has neglected over the past decade. A similar report for state and local workers was to have been released Monday. But Budget Director John Chilton said he would not release that report because the bill is not finished yet.
“It’s not a final bill. It’s part of what the legislature uses to draft bills,” Chilton said. “When we release the numbers, we want them to be the right numbers.”
Bevin spokeswoman Amanda Stamper said the budget director’s office is reviewing the report, “which is clearly marked as ‘draft.’”
“It is standard practice for there to be discussion around a draft report and changes made in the analysis before anything final is issued. Once the report is finalized, it will be released,” she said.
It’s one of the few times the Bevin administration has not released information about the pension bill. Bevin has traveled statewide to discuss the proposal, including holding a live event on Facebook to answer questions from state workers. He set up a pension website that included all a section-by-section breakdown of the proposal plus all 505 pages, an unusual move for a bill that hasn’t yet been filed in the legislature.
The decision to not release the analysis angered retiree Jim Carroll, who attended Monday’s meeting specifically to see the report.
“It should be transparent, it should be available to everyone once they verify that the figures are valid,” he said. “There are no reasons to withhold that. It’s suspicious.”
The bill has prompted vigorous opposition from state workers, and Republican leaders in the House of Representatives say they don’t have the votes to pass the bill without changes. GOP House and Senate leaders met privately for about two hours Monday, but have yet to reach an agreement.
Bevin, meanwhile, told WHAS radio on Monday that Republican House and Senate leaders had told him they had the votes to pass the bill back when it was unveiled in October.
“The two of them had said straight up that they had the votes to pass that bill. They can deny that now, why would they come out and publicly call for this bill after working for months and months?” Bevin said. “I’m convinced the votes are still there.”
While lawmakers talk, Kentucky’s retirement systems continue to get worse. The board of trustees for the Kentucky Employees Retirement System learned Monday the pension debt increased by more than $5 billion for the fiscal year that ended June 30.
The debt is how much money the state does not have to pay promised retirement and health insurance benefits over the next 30 years. Last year, that debt was a combined $21.7 billion across the five systems in the Kentucky Employee Retirement System. But this year, consultants say that debt is now $26.7 billion.
Nearly all of that increase is because the board of trustees changed some of its underlying assumptions. The biggest change was projecting the state will earn a lot less from its investments. The board now believes the state will earn an average of 5.25 percent return on its investments, instead of between 6.75 percent and 7.5 percent. The investment returns for the 2017 fiscal year ranged from 12.9 percent to 13.8 percent.
Board chairman John Farris said the resulting increase in pension debt is more realistic.
“When you apply real numbers to the system, not fantasy land numbers that were done for 10 years, yeah, the number is going to go up,” he said.