Taxpayers United of America, an anti-tax group advocating switching retirement accounts to defined-contribution systems, has asked Gov. Steve Beshear to release information on employees’ public pensions.
The Chicago-based group released its own study into pensions here, using current top salaries among state employees, university officials and teachers as well as Frankfort and Franklin County employees to calculate estimated retirement benefits.
Those earning six-figure salaries included doctors, surgeons, psychiatrists, attorneys, cabinet officials, political appointees, administrative law judges and other high-ranking positions.
The study assumed each employee would work 30 years, retire at age 52, live 23 to 32 years based on average life expectancy and earn a 2 percent cost of living adjustment each year. It also assumed that the given salary would be the average.
The report doesn’t include current retirees, certain judges, legislators or so-called “double dippers.”
Taxpayers United, which has been to Illinois, Wisconsin, Indiana, Michigan and Missouri to drum up support for 401(k)-style government retirement plans for future public employees, assumed much in its study because individual pension information is exempt from the state’s open records law.
Christina Tobin, vice president of Taxpayers United, delivered a letter to Beshear’s office, calling Kentucky one of the least cooperative states in releasing individual pension numbers.
“You (Beshear) said it will take political courage and the will to lay the foundation for a better tomorrow,” Tobin said during a press conference in reference to Beshear’s inaugural address.
“A great step toward that better tomorrow would be to release Kentucky’s pension information so that your citizens see clearly the need for immediate reform.”
Tobin said teachers and rank-and-file workers aren’t to blame for woes facing the pension system, but rather administrators with lucrative salaries who are “in bed with the union leaders, who in turn fund the wrong Democrats and Republicans for office.”
She also said current employees need to pay more into the pension system and retirees should collect Social Security, similar to workers in the private sector.
Beshear spokeswoman Kerri Richardson said reforms passed in 2008 should stabilize the pension system.
“We made significant changes to the pension system for new employees in 2008 that established a path toward getting the state’s pension systems to full funding, and corrected a number of administrative concerns that over time had weakened the health of the entire system,” Richardson said in an email.
“We are confident that by following those guidelines, the pension system will remain stable.”
The Kentucky employees and teachers retirement systems currently face a combined unfunded liability of more than $30 billion in its pension and health benefit plans, and in 2008 the legislature passed reforms to gradually increase state funding and decrease some benefits to put the systems back on solid financial footing by 2025.
Those reforms aren’t enough, said Rae Ann McNeilly, director of outreach with Taxpayers United and director of communications with the Illinois Libertarian Party.
Taxpayers United is a nonpartisan group, said Tobin, who ran for California’s secretary of state as a Libertarian in 2010. She also heads Free and Equal Inc. and the Free & Equal Elections Foundation, advocating for election reforms.
Bill Thielen, interim executive director of the Kentucky Retirement Systems, said the decision to switch to a 401(k)-style pension rests with the General Assembly, but an actuarial analysis of legislation last year showed such a change would cost the state about $7 billion over 15 years.
Costs would gradually decrease after 15 years, he said of the 25-year study.
“Whether or not they go there ultimately is a decision of the General Assembly, but they have to realize if they can’t pay the cost now, they’re going to add significant additional costs,” Thielen said of changing to a defined-contribution system.
Not everyone heralded Taxpayers United’s message.
Morehead State University history professor John Hennen, at the Capitol to protest mountaintop removal, repeatedly interjected and questioned Tobin and McNeilly on Taxpayers United’s interest in public pensions and its corporate donors.
The confrontation reached its climax when Tobin requested a Capitol security guard in the Rotunda.
Afterward, Hennen acknowledged that he tends to get “a little too excitable” and said he supports any effort to flush out abuses in the state pension system.
But he said Taxpayers United’s study focused on the high-salaried employees, not the average state worker. The corporate sector has successfully demonized public pensions and, in some cases, undermined collective bargaining, he said.
“The way they’re trying to drive a wedge between public workers and private workers is by now going to private sector employees and saying, ‘Look at these people who are robbing you, the taxpayer,’” Hennen said.
“… They picked high-dollar people who may be overpaid, depending on where they are, and their pensions may be too lucrative, but by doing that, they’re casting suspicion on all public employees, including those who take low pay work so that they can get the defined benefits.”
Statewide, 39,732 retirees and beneficiaries in the state’s non-hazardous retirement fund received an average of about $20,400 in pension payments for fiscal year 2010, according to KRS’ latest comprehensive annual financial report.
More than 44,000 retired teachers and beneficiaries got more than $29,800 yearly on average in the same fiscal year, the Kentucky Teachers’ Retirement System’s report says.
Retired teachers, unlike some state retirees, don’t receive Social Security, said Beau Barnes, deputy executive secretary of operations and general counsel for KTRS.
In Franklin County, 6,025 retirees or beneficiaries got more than $30,200 on average in fiscal year 2011, according to KRS numbers.
A move to a 401(k)-style system for future state workers likely faces an uphill battle in the upcoming legislative session. A bill calling for such a change passed the state Senate but failed to clear the House’s State Government Committee during the 2011 session.
