Kentucky Gov. Matt Bevin vetoed a bill that would have phased in increased pension contributions for city and county governments and school districts, while also creating a way for entities to withdraw from the pension system through buyouts.
"This pension bill that was passed does not solve the problem, (it) doesn't even come close to solving the problem," Mr. Bevin said at a press conference in Frankfort on Monday. "It doesn't begin to address the problem we have now."
He added that although he's "grateful that at least some effort has been made," the state's pension problem "still looms large."
House Bill 362, which passed the state General Assembly, would allow universities, community colleges and health departments to cease participating in the Kentucky Employees Retirement System, provided the agency pays the cost of ceasing participation.
It would have also provided a window where state agencies participating in the Kentucky Employees Retirement System or non-profit agencies participating in the County Employees Retirement System may cease participating by Jan. 1, 2019, by paying off the actuarial costs through equal installments without interest over a 30-year period. KERS and CERS are part of the $16 billion Kentucky Retirement Systems, Frankfort.
In his veto message released April 5, Mr. Bevin said that although he supports the phased-in provisions, "In their current form, the buyout provisions are well-intended, but provide too much risk to the solvency of both the KERS and CERS." He added they "will lead to cash flow issues and shift even more of the pension burden to future taxpayers."
The state's pension system has $60 billion in liabilities. According to Mr. Bevin, the new bill only raises $300 million over the next 20 years, which isn't nearly enough.
"We have the worst funded pension system in America," he said at the press conference. "That's not 'possibly,' that's not 'in some peoples' opinion,' that's an absolute fact."
The governor's veto message is available online.
Nicole Burton, a spokeswoman for the governor's office, did not immediately respond to a request for comment.