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Governor Steve Beshear has proposed policy changes to the state’s retirement system in hopes of providing more than $37 million in relief to counties, like Spencer County, that are struggling with financial shortfalls.
His recommendation to the Kentucky Retirement System Board is to allow required contribution obligations to be spread over a 10-year period instead of the current five-year period. The move has been cited as providing immediate relief to local governments next fiscal year while maintaining the pension system.
“Just as the state is struggling to cope with the worst national financial crisis since the Great Depression, cities and counties are straining to provide the most basic services to their residents,” said Beshear during a press conference last Friday. “My proposal will provide more than $37 million of immediate relief to our local governments in a way that keeps our pension systems financially sound for years to come.”
Spencer County Judge Executive said it is really too early to know if the Governor’s proposal will even come to fruition.
“(The proposal) doesn’t have any prediction on what the contribution rate is going to be, so I can make any projections of savings,” said Jenkins. “Having said that, it would be logical to assume that if the pension indebtedness is spread over a longer period of time, it would lower the actuarial contribution that cities and counties would be required to pay.”
The biggest downfall to Beshear’s plan would be if, in later years, the required contributions were forced to jump significantly to ensure a fully-funded pension fund in 10 years, said Jenkins.
“Many things must happen before any of this can be initiated, so we will continue to monitor and talk with our legislators and contacts in the governor’s office,” said Jenkins.
Other recommendations by the Governor included:
• Adopting effective securities’ litigation policies to enable the pension systems to claim millions of dollars of damages from Wall Street losses where companies have engaged in illegal or unethical practices;
• Exploring creative health-care reforms adopted in other states to provide affordable health benefits, while ensuring the long-term financial stability of the funds;
• Promoting the state’s existing optional defined contribution, 401(k)-style plan, the Kentucky Public Employees’ Deferred Compensation Authority, to encourage individual retirement savings;
• Providing more oversight and transparency of pension system funds to enable the Governor and the General Assembly to ensure that the systems are properly funded; and
• Amending enabling law to authorize the Kentucky Asset Liability Commission (ALCo) to issue pension-related bonds when funds are appropriated by the General Assembly to pay off unfunded liabilities of the pension systems. Specifically, consideration should be given to authorize the issuance of bonds, if market conditions are favorable, to repay funds to the KTRS pension fund that have been used to cover health insurance costs for KTRS members.
While the governor's office works on a variety of plans to cope with reduced revenue, Spencer County magistrates have scheduled the next fiscal court meeting (January 19 at 9 a.m.) as a time to review where the county stands financially.
"Right now, we are alright, but depending on the (legislative) session, we don't know what is going to happen," said Jenkins.
Magistrate John Riley requested the court review the occupational tax receipts and see if promises to lower taxes is possible.
Magistrate David Henry cautioned that the court would need an entire year to make any such determination.
Treasurer Doug Williams told fiscal court that the only areas where the county over-estimated revenue in 2008 are in inspection fees and planning and zoning.
"We lived in a boom time for so many years," said Williams.
Magistrate Bill Drury said that homeowners are no longer building new structures. "People are adding on to what they already have."
In other fiscal court news:
• Emergency Management Director Darrell Stevens informed the court about a recent warning siren test that discovered as many as four malfunctioning sirens.
"I don't know if the cold weather got to them or the batteries went bad," said Stevens.
Fiscal court approved a motion to repair any sirens that are not operating properly.
• Fiscal court approved a bid from Kehne and Company to remove the metal stairs from the building behind the old jail house and replace with a new set of metal stairs. Plans are to use the second story of the building as storage. The cost of the project was bid at $13,450. Of that amount, $9,800 will be provided through a grant. Riley voted no on this motion. Drury abstained.
In a related move, court approved a bid from Thompson Framing to create space for the county's voting machines. The cost of the bid was for $960. Henry abstained from the vote.