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The Plan

"Keeping the Promise" meets the legal and moral obligations owed to retired teachers and public servants.

Gov. Matt Bevin, together with state legislative leaders, has unveiled "Keeping the Promise" — a comprehensive plan to save Kentucky’s ailing public pension system.

"There is no such thing as an insurmountable obstacle," said Gov. Bevin. "We, as a Commonwealth, have a moral and legal obligation to fulfill the promises that have been made to our public employees. This is not just about fixing our present underfunding problem. It is also about ensuring that we leave a better, financially stable Kentucky to our children.

"The right thing to do is rarely the easiest, but we are determined to address this crisis with the most fiscally responsible public pension reform plan in the history of the United States. I am confident that the rest of the country will pay close attention to this excellent work by our legislature and for good reason. For those retired, for those still working, and for those yet to come: we are truly fixing our broken pension systems. United we stand. Divided we fall."



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Crisis

$64+Billion

Unfunded Pension Liability
per consultants

$6+Billion

Unfunded Health Care Liability

$15,000

Liability for each Kentuckian

$7Billion

Negative cash flow from FY 2006 through FY 2016


By the year 2022, KERS-NH plan runs completely out of money
(using prior funding patterns)

Negative Impact

Kentucky's pension spending has been increasing nearly five times as fast as revenues – growing 56% in FY2017 alone. This effectively reduces money available for other important budgetary priorities. (For example, K-12 education, Medicaid, etc. and public services.)



WORST

aggregate pension underfunding among the 50 states

Standard & Poor's ranking

3rd Highest

net pension liability as a percentage of governmental revenues among the states

Moody's Investors Service ranking

3rd Highest

pension-related budget burden in the nation

The Center for Retirement Research at Boston College

Message from the Governor

“We have a legal and a moral obligation to those of you that are retired to fulfill the promises that have been made to you.” - Governor Matt Bevin


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We WILL Fix Kentucky's Pension Systems

Kentucky Farm Bureau: Ham Breakfast Remarks

Pension Reform

The status quo is not sustainable and is seriously threatening retirement security for all public sector workers in Kentucky.

Billions in pension debt are growing in perpetuity unless significant changes are made. Pension debt will continue growing even if the plans earn their expected investment return because of the "back-loaded" funding method used to pay off existing unfunded liabilities. Several of Kentucky's pension funds may completely run out of money with just one or two more bad years of investment returns.

Previous changes have not fully fixed the problem.

Shifting KRS's state employees (non-hazardous) to a cash balance plan in 2014 was a positive step that restrains the future growth of liabilities. But that change did not solve the plan's solvency problem for retirees and most current workers. TRS remains on an unsustainable path and needs to pursue reforms to ensure that all commitments made will be met. This must be done by putting in place a new, sustainable plan for future workers, focused on providing retirement security while reducing the exposure of state and taxpayers to financial risk.

Kentucky's Pension Systems