KRS estimates Governor's budget plan would result in $83M pension shortfall

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FRANKFORT, Ky. (WYMT) -- The Herald-Leader reports that Governor Andy Beshear's budget plan would result in tens of millions less in pension contributions than Kentucky Retirement Systems had expected.

In public testimony Thursday, KRS Executive Director David Eager estimated the shortfall at around $83 million a year.

Governor Beshear's office challenged that figure, estimating the shortfall to be closer to $25 million a year. Governor Beshear had included roughly $100 million in his two-year budget to help public employers subsidize partial pension relief.

“Under Gov. Beshear’s plan, $110 million more for the agencies is going to the Kentucky Employees Retirement System in each of the next two years compared to the last budget,” said Beshear spokeswoman Crystal Staley. “The governor’s plan will result in an 84.41 percent employer contribution rate, which is about $25 million shy of the 93.01 percent rate, but is much greater than the 49.47 percent being contributed now.”

However, the Governor's partial pension relief might not make it into the final budget bill before the General Assembly adjourns in April.

Following the hearing Representative James Tipton, the chair of the House's standing committee on post-secondary education said he was "sympathetic" to agencies facing pension contribution issues.

However, he also said there was a limit to how much longer their contribution rates can be capped by the General Assembly.

“The bottom line is, we have a large unfunded liability that needs to be paid," Tipton said. "So who is going to pay for it and when? If we keep freezing rates for people, that doesn’t really seem to be solving the problem.”

The General Assembly passed a law last year encouraging agencies to quit the pension system, but none have.