Lexington Herald-Leader op-ed: On pensions, Kentucky should heed W. Virginia’s hard-learned lessons

By DAVID HANEY

Gov. Matt Bevin and the Kentucky legislature are about to make a terrible mistake with the pension plans of public employees — one that West Virginia made. Switching newly hired public employees to a defined contribution 401(k)-style account will hurt Kentucky and its public employees.

In the late ‘80s, West Virginia was facing financial difficulties. The state was months behind in paying income tax refunds to residents. Our health insurance program for public employees was so far behind in paying claims that many doctors stopped accepting state employees as patients. Most of all, our teacher pension system was reportedly the worst funded in the nation with over $7 billion in unfunded liabilities and only $300 million in assets.

In 1990, Gaston Caperton was elected governor. One of his goals was to fix the system and its unfunded liability. The governor and legislative leaders pushed a defined contribution plan to replace the pension system for new hires. In 1991, with all branches of government on board, the switch was made, and the defined benefit pension systemfor education employees was closed to new participants.

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