From Jonathan: Working in earnest to save our pension systems

The status of Kentucky’s pension systems is dire. A large, unfunded liability leaves our state with a crisis that could negatively impact every part of state government if not dealt with as soon as possible. This includes the basic and necessary priorities of state government, including education, law enforcement, infrastructure and other key services.

It is no longer an option for us to “kick the can” down the road, as has been done for so long. As your State Representative, I am committed to developing real, long-term solutions to this pension crisis, so that we can continue providing retirement security for those who teach our children and keep our communities safe.

As a member of legislative leadership, I have spent the last several weeks in various meetings regarding this difficult and complex issue. No one disputes the fact that we as a state cannot financially sustain the current system, and that changes are needed. My colleagues in the General Assembly and I are working closely with the Governor and interested parties to come to a solution. We must ensure that we keep our promises, while also putting our state on a sustainable path moving forward.
There are many causes for the crisis we are in today, each of which contributed to the unfunded liability we must now dig out of.

• Systems were being managed under a misguided belief that robust investment returns could make up for failing to provide adequate funding.

• Problems were compounded by the retirement systems making unrealistic assumptions about investment returns and payroll growth.

• The retirement systems were assuming growth in payrolls, even though it was clear that the number of state employees was declining.

• All of this meant that previous executive budgets sent to the General Assembly didn’t request sufficient funds to keep the pension systems solvent. The result was the rapid decline of the health of our pension systems.

The failing pension systems we are currently facing provide NO retirement security to state employees and teachers, and negatively affect all Kentuckians. So here we are in 2017, and we must either break the legal obligations made to our teachers and state workers, or take action to fulfill our commitments.

Over the last several years, there have been a few small steps in the right direction. In 2016, I voted for a budget that provided a historic amount of resources to the Commonwealth’s pension systems, which was passed and signed into law by the Governor. That budget included more than $1.2 billion dedicated annually to shore up shortfalls in KERS and KTRS, and created a permanent fund to be dedicated to pensions only. We also authorized an independent, third party (The PFM Group) to perform a comprehensive review of the state of our pension systems. Their report was issued on Monday, and included several recommendations.

We’ve been looking at these recommendations. That’s what they are — and all they are — recommendations. I believe it is imperative for the General Assembly and the Governor to balance the need for aggressive steps to save the pension system with the legal obligations that the state has made to retirees, public employees and our schoolteachers.
I truly believe, and am committed to, reforming Kentucky’s broken pension systems to avoid devastating cuts to education, public safety, and infrastructure, while honoring the commitments made to our public employees and teachers. There is no bigger priority our state, and all of our citizens, at this time.

This issue is complex. Please feel free to contact me at with any questions or suggestions. It is an honor for me to serve you in Frankfort at this critical time.

Rep. Jonathan Shell is the Majority Floor Leader in the State House of Representatives. He represents the 71st district, which includes western Madison as well as all of Garrard and Rockcastle counties.

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