Boyle officials critical of planned retirement contribution increases
Local governments and schools in Boyle County could wind up paying a combined total of more than $1.85 million in additional contributions to the County Employees Retirement System this coming fiscal year.
Those increases — being mandated by the Kentucky Retirement Systems Board of Trustees — are setting off alarm bells for elected officials, who say the planned increases are unwarranted and amount to the state refusing to take responsibility for its own debts.
The additional cost means local governments could have to cut services to make up the difference, Danville Mayor Mike Perros said during a meeting of the local Economic Development Partnership Wednesday.
“Our legislature has decided that in order to shore up all of the pension systems, they’re going to push this down to the cities, the counties, the school boards,” Perros said. “The irony of all this is that … the money that the city and the county are supposed to send goes to support a system that we don’t have anything to do with.”
Employers that participate in the County Employees Retirement System (CERS) — such as Danville, Junction City, Perryville, Boyle County Fiscal Court, Danville Schools and Boyle County Schools — are required to contribute to CERS annually an amount equal to a percentage of what they pay their current employees.
The rates for the current fiscal year are about 19 percent of what participants pay their nonhazardous employees and about 31.5 percent of what they pay their hazardous employees. In December, the Kentucky Retirement Systems Board of Trustees issued a memo stating that those rates would go up to about 28 percent and almost 47.9 percent in the coming 2018-19 fiscal year.
Perros said CERS is currently funded far better than other state retirement systems. He suggested the additional CERS contributions are being required to help those other flagging retirement systems.
“We’ve taken care of our mess back in 2013, when CERS reformed itself to produce a hybrid plan,” Perros said. “So not only is this a lot of money that’s going to come out of this community, it’s a lot of money that goes to pay for somebody else’s mistakes.”
According to information from the Kentucky League of Cities, Danville would be required to contribute an additional $682,313 under the new rates; Junction City would have to contribute an additional $17,893; and Perryville would have to contribute an additional $10,052.
Under the lower rates this year, Danville is expected to pay about $1.38 million into CERS, while Junction City and Perryville are expected to pay $38,691 and $20,594 respectively. The extra costs next year represent increases of between about 46 and 49.5 percent for the cities, according to KLC.
Boyle County Judge-Executive Harold McKinney said Wednesday the Boyle County Fiscal Court expects to pay almost $1.1 million into CERS this year. That’s estimated to rise by about $600,000 to as much as $1.7 million next year.
“These are very fluid numbers,” McKinney said. “It could be at $1.5 (million), $1.6 (million), but we think it’s going to increase by about $600,000 under the current plan.”
CERS increases for local school districts has been previously reported at an estimated $550,000 — $260,000 for Danville Schools and $290,000 for Boyle County Schools.
The situation could resolve differently if the state legislature takes action. Officials at Wednesday’s EDP meeting discussed the possibility of taking a stance one way or another on legislation that would help or hurt their cause, but McKinney cautioned that doing so isn’t as simple as it might seem.
“The problem with taking a position is it’s so inter-related. If you take a position on one bill and not on the other, you may be doing yourself some harm,” he said. “I’m not saying don’t take a position. The other thing I would say … we had a legislator say to some (judge-executives) the other day, ‘I don’t know what’s going on; it’s all being done by leadership.’ And he was very frank, very candid. He said, ‘I can’t tell you what’s going on.’ … So the question is how do you get your message to the people that make the decisions?”
Perros said he believes state Rep. Daniel Elliott is “firmly understanding of our plight and sympathetic to that,” as is state Sen. Rick Girdler. But they’re not able to change the direction Frankfort is taking.
“Somehow, we’ve got to get a message in above their pay grade,” Perros said.
“The leadership needs to get 2,000 calls,” McKinney said.
“Because what leadership is hearing is 2,000 calls from the other side,” Perros said.
According to the state legislature’s website (lrc.ky.gov), the state Senate leadership consists of President Robert Stivers (R-Manchester), President Pro Tempore Jimmy Higdon (R-Lebanon), Majority Floor Leader Damon Thayer (R-Georgetown), Majority Caucus Chair Dan Seum (R-Fairdale), Majority Whip Mike Wilson (R-Bowling Green), Minority Floor Leader Ray S. Jones II (D-Pikeville), Minority Caucus Chair Dorsey Ridley (D-Henderson) and Minority Whip Dennis Parrett (D-Elizabethtown).
The state House leadership consists of House Speaker Pro Tempore David Osborne (R-Prospect), Majority Floor Leader Jonathan Shell (R-Lancaster), Majority Caucus Chair David Meade (R-Stanford), Majority Whip Kevin D. Bratcher (R-Louisville), Minority Floor Leader Rocky Adkins (D-Sandy Hook), Minority Caucus Chair Dennis Keene (D-Wilder) and Minority Whip Wilson Stone (D-Scottsville).
McKinney said the added CERS burden is just one of the ways local governments are feeling the crunch from the state. There’s also a lack of willingness to increase the state gas tax so roads can be maintained.
“All of this is in the context of us losing road funds,” he said. “A legislator (told) one of my judge friends, ‘I don’t care if the roads go to gravel, we’re not fixing the road fund. That’s what you’re dealing with.”