Tuesday, October 11, 2011

Bluegrass Institute report: Private groups gorging at state pension trough

Workers at politically connected private agencies eligible for taxpayer-funded retirement, health care benefits

For Immediate Release:
Tuesday, Oct.11, 2011

Contact: Jim Waters at 270-782-2140

(FRANKFORT, Ky.) – A new Bluegrass Institute policy brief shows that hundreds of workers at a multitude of agencies – including some private organizations – are feeding at Kentucky’s taxpayer-funded public pension trough.

According to “Future Shock – Kentucky’s public-pension hole: Deep and getting deeper,” even staff members at the Kentucky Education Association, the state teachers’ union, are allowed to join the Kentucky Teachers’ Retirement System – as long as they had prior involvement in any of the commonwealth’s six public employee pension plans.

“Kentucky’s public pension plans are more than $31 billion underfunded and the hole is getting deeper by the day,” said Phil Moffett, the institute’s president and CEO. “We must understand how we got in this hole and what we need to do to get out. Getting private industry and privately employed individuals who work on contract with the state off the public dole is a good start. The ‘Future Shock’ series will shine a bright light on the problem and present solid free-market solutions.”

Also included in Kentucky’s pension plan are a faith-based housing group, master commissioners and their staffs and the Commonwealth Credit Union.

The credit union currently has 365 members in the Kentucky Retirement Systems, including 253 active employees, 83 current or former workers vested but no longer contributing to the plan and 29 current retirees.

A recent report by the Lexington Herald-Leader noted that Commonwealth Credit Union has $890 million in assets and $58 million in annual revenue.

“Why is this healthy and profitable private company getting corporate welfare at taxpayer expense?” Moffett asked.

Responding to claims that Commonwealth was allowed to join the state pension system because “its customers are government employees,” he said: “This seems ridiculous. Wal-Mart in Frankfort probably has a very large group of customers who are state workers. Should they also receive state pensions?”

Today’s release previews a full research report on the state’s ailing public pension system, which currently faces a $31.4 billion unfunded liability.

The institute will release the report, which is authored by Lowell Reese, owner of Kentucky Roll Call, a public affairs publishing company in Frankfort, and former state Chamber of Commerce executive, in sections that address:

• How Kentucky’s pension mess started and grew.

• Who the players are and who voted for the bills.

• Examples of gross abuse of the public pension system.

• Solutions based on free-market principles.

For interview information, please contact Jim Waters at 270-782-2140 or jwaters@freedomkentucky.com.

11 comments:

Hempy said...

When you say, "Solutions based on free-market principles," why don't you admit that you have no solutions?

According to Adam Smith, the father of capitalism, and your patron saint Milton Friedman, a market that has prohibitions, is not a free market.

The American market is rife with prohibitions to prevent competition. Hence, there are no "free-maarket" solutions.

Liberty General said...

That's exactly why we should REMOVE those prohibitions, Hempy.

Hempy said...

Liberty:

You got that right. The jobs that would be created and the revenue generated would soon be sufficient to resolve these pensions plans.

Anonymous said...

You mean to say I am funding the presumably private teacher's union staff with my tax dollars so they can maneuver to go after even more of my tax dollars??!!

Can I do open requests on this apparently not so private organization?

And, what about all that "stuff" we hear about separation of church and state? How did a supposedly faith-based organization get on the public dole?

Good Grief!

Good catch, Bluegrass Policy Blog.

Hempy said...

The article said, “staff members at the Kentucky Education Association, the state teachers’ union, are allowed to join the Kentucky Teachers’ Retirement System – as long as they had prior involvement in any of the commonwealth’s six public employee pension plans.”

The article didn’t look into whether or not these groups paid into the system. For example, if a teacher has prior military service that teacher can buy that time and apply to years of service, which count towards retirement time. Thus, if a teacher had 5 years of military service and bought that time that teacher could teacher 22 years and retires with 27 years credit. Presumably the arrangement would be the same for employees of private groups.

Being vested means that the former workers can only get retirement income for the vested time.

The question Moffett should have asked was, did Commonwealth Credit Union pay the same proportional amount as teachers pay to buy into the system? If not, that is a legitimate issue.

If they did, then what’s wrong with a state retirement selling businesses and employee groups an option to buy into the system? If the state retirement is a better option than what the private sector is willing to offer that would seem like a legitimate business deal.

If government is funding these private groups as well as state employees, then the question should be why aren’t these private groups paying their share for their employees instead of the state picking up the tab—if this is what’s happening?

Part of the unfunded liability was when John Y. Brown raided the Teachers pension fund, which the state has yet to repay. That’s much like what Congress did raiding Social Security to pay for the jobs-killing Bush tax cuts for the wealthiest few.

Anonymous said...

Hempy -

It seems your thought pattern is that there are two classes of employees - those that work for the government on tax dollars and those that don't.

Those that work for the government want to transfer benefits, credits, years of service, etc. across plans to end up with the best deal.

Those that work in the private sector have their pension coverage ended when they change employers.

Being a tax payer I absolutely don't want to pay for any of these government employee sweet deals. Just in case you haven't looked the country is broke and so is the state.

It is time to face reality that the existing government employee benefits need to be reformed now.

To put it in perspective, the people living off tax dollars are the very same people that cannot find $1 real dollar to cut in their massive budgets. All they can find is cuts in future increases.

Government employee benefits are a big reason state, city, county, universities, etc. are in serious financial shape.

If you want to start questioning did whomever contribute whatever in the government system, then question why isn't every citizen given the right to get in the tax trough for these benefits?

End this class system that exempts tax paid employee from reality.

Hempy said...

When you say the country is broke, it's clear you don't know what you're talking about.

Consider: $600 trillion OTC derivative transactions; $4 trillion-a-day foreign exchange derivative transactions; $1 trillion-a-day in trades in UBS Swiss bank's American operation; and $1.5 trillion-a-year in bank laundered drug money.

If a proportional rate toll that tops out at 5% were assessed on these transactions that's $222 trillion to the treasury. If the buyer pays a similar toll, that's an addition $222 trillion. Together that's $444 trillion to the treasury.

Once the federal obligations are met, the balance could be distributed to the states based on population. That would enable states to fund their pension funds and meet their obligations.

If the government offers a better pension fund why shouldn't private organizations have a option to buy into the system without government subsidies?

Government pension systems should be expanded much as government healthcare needs to be expanded to provide coverage for all people. I'd call that Good Samaritan Care.

Anonymous said...

Yes Hempy, 'IF' ... However, your 'IF' conditions do not exist. You promote the OTC derivative transactions all the time but your buddies living off tax dollars haven't bought your suggestion. You should certainly go to DC and sell it. They should leap at the chance to have all of that money to spend.

But until you do, the US government does not have all the money your 'IF' scenario proposes and is functionally broke by private sector terms.

Hempy said...

Not only is the Congress and White House living off tax dollars, but they are bought and controlled by Wall Streeters.

The moneychangers are still in charge of the temple, their tables are not overturned and their coins are not scattered.

Taxing all members of society to defray the expenses of the whole society was advocated by Adam Smith, the father of capitalism. Alexander Hamilton advocated a proportional tax on the movement of all money every time it moved.

What’s lacking is the moral fiber to begin assessing a proportional rate toll on the movement of these transactions.

By capitalistic terms America is not broke. By the thieving moneychangers the government is functionally broke.

The capitalistic solution is to look for other sources of revenue. The four that I’ve suggested are viable options.

The European Union is beginning to look at transactions fees. Treasury Secretary Timothy Geithner doesn’t like it because he’s a Wall Streeter. There is an Association for the Taxation of Financial Transactions that’s also promoting the idea.

It’s an idea whose time as come. But a big ship doesn’t turn on a dime.

Moffett’s advocacy of a “free market” solution to state pension funds is nothing short of inane. But since he’s a follower of Ayn Rand’s atheistic ideology that doesn’t like capitalism or anything that promotes the public good, it’s not surprising that he promotes a mythical “free market.”

It's the free marketeers do-nothing solution.

Gexton said...

Post is really very intereste and informative and i always appreciate the post which is full of its swing color.
pension loan
pension release

Hempy said...

The private sector 401(k) plans that you tout so highly are economic disasters. People who have to depend on 401(k)’s will be financially worse off than their parents. A majority of participants in a 401(k) can expect a much lower standard of living in their retirement years. Participants in 401(k)s pay higher costs than do defined benefit plans. Defined benefit plans are half the cost of 401(k)s.

You need some transparency to expose you nefarious con job that you try to pull on unsuspecting people all in the name of a failed political-mythical “free-market” ideology that has yet to have any success.