Kentucky Retirement Systems is the name of the pension fund that covers most state workers other than teachers. It also covers a substantial number of people working for local governments that participate in the fund.
KRS, as it is known in shorthand, is the most troubled fund in the state's vastly underaccrued pension system. It has about $16 billion of assets, but its unfunded liability is $27 billion.
This is the backdrop of a Lexington Herald-Leader article that appeared in the Sun last week. The article said 1,300 more state employees than anticipated chose to retire this fiscal year. That is an 18 percent increase over recent years in a workforce that presently numbers about 36,000 people.
David Eager, executive director of KRS, said absorbing these additional retirees is "not a major problem" for the fund despite its perilous condition. The larger problem he says is that there are now more retirees drawing pensions from the fund than there are active employees paying in. That trend is not likely to get any better, given the state's pension-driven fiscal problems and the impact of technology on employment generally.
The article also quotes David Smith, executive director of the Kentucky Association of State Employees, who lays the spike in retirements at the feet of Gov. Matt Bevin and the Legislature. He says, "You've got their attacks on public pensions. You've got yet another state budget that doesn't have raises for most state employees. You've got state agencies so badly understaffed its miserable for the people left behind."
There is a degree of truth in all of that, although there are also other factors at play. One is simple demographics, as aging Baby Boomers retire in greater numbers every year. Another is the red-hot private-sector jobs market.
It has long been a tradition for state workers to take advantage of pension provisions allowing many to retire with full benefits in their mid-to-late forties and launch private-sector careers. Last week the Wall Street Journal reported that for the first time since records began being kept job openings in the U.S. exceed the number of unemployed. And by a lot. At the end of April there were 6.7 million job openings in the nation versus 6.3 million unemployed.
If ever there was a time to make the leap to the private sector, this is it. Opportunity has never been greater, particularly for experienced workers.
Also, the steady decline in the number of state workers likely has as much to do with technology as it does tight budgets. The latter does tend to drive the former.
The Herald-Leader says Kentucky's state workforce is 25 percent smaller than it was a decade ago. So, we will wager, is the staff of the Herald-Leader, and many other private companies that have been forced to adapt in a rapidly changing world.
None of this is to dismiss the concerns raised by those quoted in the article. The state will find recruiting new workers more difficult now that pensions for future hires are more on par with the private sector. And supporting a pension fund amid a declining workforce is just a part of Kentucky's pension nightmare.
But it is fantasy to think Kentucky can fix all of this by simply going back to the way things were. It is human nature, and certainly the nature of politics, to try to lay dysphoria over difficult realities at the feet of the governor and Legislature. But in truth this stew was brewed years ago by lawmakers who have already, for the most part, conveniently flown the coop.