Pension crisis could have local impact…soon

By Greg Bird
birdman@tmcvoice.com

The state pension crisis is no closer to being resolved, but it appears that changes are coming that could seriously affect the budgets of the McCreary County Fiscal Court, School District, Water District and other offices.

A memo from John Chilton, State Budget Director to all County employers notes the potential impact of the state pension crisis on all local government budgets.

To offset an estimated $9 billion shortfall in funding for the County Employees’ Retirement System, a revised schedule of employer match to the system will be “substantially higher” than in previous years.

According to the memo, the McCreary County Fiscal court is expected to see their contribution to the retirement fund increase by $203,000 by the next fiscal year – a 50.4 percent increase.

That same increase will affect both the School District, which is expected to have to contribute an additional $383,904, and the Water District, where an extra $103,050 of contributions is expected.

The School District will see another hit of about 66 percent from the change in the state retirement plan which affects employees in the Kentucky Retirement System.

“The increase arises primarily from revised actuarial assumptions that the KRS Board believes are realistic and which will result in immediate decreases in the unfunded liability,” Chilton states in his memo.

If no legislative action is taken, which would potentially change how contributions are handled, employers would also pay an additional 9 percent in to the CERS for the current fiscal year based off revised numbers from the memo.

That would cost the County about $10,000, the School District an additional $20,000, and the Waters District about $6,000 that will have to be absorbed in the current budgets. Employers with state plans could see an increase of about 34 percent as well.

Judge Executive Doug Stephens said Tuesday that he is waiting for more clarification from the state level on how to proceed with budgeting for next year but admitted that it would be difficult to account for the additional expense without finding cuts in other areas.

McCreary County Schools Superintendent Mike Cash stated the pension is just one of two potential financial issues facing the District.

In a recent conference call with Kentucky Department of Education Commissioner Stephen Pruitt superintendents from across Kentucky were advised that Governor Matt Bevin directed a 17.4 percent reduction for all state agencies. This cut would cost the KDE about $69 million.

While Pruitt said he would fight to keep the reduction from affecting SEEK allocations, a significant source of funding from the state, there is question as to how the department can reduce costs by that amount without cuts that could affect local schools.