SUNDAY EDITION | Pension crisis stokes fear among Kentucky's public employees
“It was a very hard decision to make, because I am not ready to just sit at home for the rest of my life. But I have never been one to gamble. And I am tired of the worrying over whether my pension will be there or not. So I decided it was my time to go."
LOUISVILLE, Ky. (WDRB) – After spending 28 years as a public school teacher, Kim D’Annunzio did something this summer she never thought she’d do at the age of 50. She retired.
“It was a very hard decision to make, because I am not ready to just sit at home for the rest of my life,” she told WDRB News in an interview last week. “But I have never been one to gamble. And I am tired of worrying over whether my pension will be there or not. So I decided, it’s my time to go.”
D’Annunzio – who spent her first three years as a math teacher in Bullitt County and the last 23 years in Jefferson County Public Schools – is not alone.
Thousands of other public service employees who have contributed to their retirement under Kentucky’s pension systems are fearful as lawmakers consider a number of cost-saving measures aimed at shoring up the plans, which are estimated to be nearly $60 billion in the hole after years of inadequate state funding.
“We’re seeing a lot of people that might have stuck around for a few more years,” said Louisville Fire Department Capt. Brian O’Neill, a 16-year veteran. “They’re making the decision that enough is enough so they’re going ahead and retiring.”
Gov. Matt Bevin is expected to call a special session of the legislature this fall to deal with the pension crisis.
“Right now, every plan in the state is in dire, dire underfunded status,” Bevin said during an Aug. 28 chat posted on Facebook. “We have a legal and a moral obligation to fulfill the commitments that have been promised to people.”
The PFM Group, a consultant hired by the Bevin administration, has recommended freezing benefits, raising the age employees can retire with full pensions and moving some local and state government workers into less secure plans 401(k)-style plans.
In a message to Kentucky’s 42,000 public school teachers last week, state Education Commissioner Stephen Pruitt cautioned against making a rash decision to retire based on anxieties about future changes.
“I get the fear, I get the worry,” he said. “I am not here to ask you to not have that. What I am here to ask you to do is be thoughtful, to be careful. To not make a life decision based on speculation or conjecture. Follow the issues and use your voice.”
Ron Richmond, a communications coordinator with the American Federation of State, County and Municipal Employees Council 962, which represents about 6,000 government employees in Kentucky, said his union has heard from hundreds of members.
“People are seeing one side of a story and are reacting to it, and unfortunately that reaction has been fear of what their future holds,” he said. “We have people calling us saying do I need to go? Do I need go? And we're telling them to stay calm...make a rational decision.”
Bevin has said some of the recommendations in the PFM report are “good ideas” but added it’s too early to say which ones, if any, will be implemented.
“There's some that frankly, I don’t think there will be an appetite for,” Bevin said.
Kentucky maintains eight pension systems providing lifetime retirement benefits to different types of state and local government workers – from police to teachers to state bureaucrats – and the PFM Group’s recommendations vary according to the plan and working status.
For the biggest and worst-funded plan – called KERS Non-hazardous – PFM Group recommends freezing benefits for current workers and giving them a 401(k)-style “defined contribution” plan for their remaining years of service.
Employees could also elect to receive their accumulated benefit in a lump-sum payment that would be rolled into an individual retirement account, allowing the state to shift investment risks off its books.
For public school teachers, the consultant recommends giving new hires access to the Social Security system – in which Kentucky teachers don’t currently participate – along with a 401(k)-style plan.
Current teachers would continue to be promised pensions, but they would have to work until age 65 to receive an unreduced level of benefits upon retirement. Today, teachers can retire with full benefits after 27 years of service regardless of their age.
JCPS Acting Superintendent Marty Pollio told WDRB News in an interview last week that 237 of the district’s 15,000 employees could retire now and receive full benefits. Of JCPS’ about 6,000 classroom teachers, 110 are eligible to retire now with a full pension, he said.
“We struggle consistently right now for teachers to make sure that every single school is staffed appropriately with high-quality teachers,” Pollio said. “There is no doubt that losing a large number of teachers would have a negative impact on our schools.”
Pollio said he understands lawmakers have tough choices to make, but he hopes the state “honors the contract they made with teachers when they were hired.”
For hazardous-job employees like firefighters, PFM recommends not allowing them to retire with a full pension before age 55. Today the threshold is 20 years of service.
“Whereas maybe I was starting to think about my options in the next three years…under their suggestion, I would have to wait another 12 years,” said O’Neill, who serves as president of the local firefighters union.
He said 20 percent of Louisville’s firefighters are eligible to retire.
“Out of 500 members, we could lose 100 tomorrow,” he said, adding that it takes “an absolute minimum of 18 months” to fill a vacancy.
The Louisville Metro Police Department is facing a similar issue with 32 officers retiring last month and another 100 eligible to retire in January. LMPD has about 1,200 officers.
Chris Poynter, a spokesman for Louisville Mayor Greg Fischer, said the city’s human resources department is looking at how many Metro employees are eligible to retire.
“It is a concern for us because of all the uncertainty… you never want to have a mass exodus of institutional knowledge to leave,” Poynter said. “We don’t know what the impact will be. We have a lot of employees who are concerned and rightly so.”
There isn’t a day that goes by that D’Annunzio doesn’t miss her classroom and students at Olmstead Academy South.
“I had planned to stay another few years,” she said. “I loved it there. I loved the kids and the staff. Hopefully, they will get the pension stuff figured out before they lose a lot more.”
Reporter Antoinette Konz covers K-12 education for WDRB News. She can be reached at 502-585-0838 or @tkonz on Twitter.
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