Difficult State Pension Challenges Await Kentucky’s New Governor
Glenna Bevin, left, wife of Kentucky Republican Governor-elect Matt Bevin looks over his shoulder as he gives his victory speech at the Republican Party victory celebration, Tuesday, Nov. 3, 2015. Timothy D. Easley / AP Photo
Matt Bevin promised to reform the state’s public worker pension systems. But the Republican faces an uphill struggle.
For only the second time in nearly 50 years, Kentucky voters on Tuesday elected a Republican governor, sweeping businessman Matt Bevin into office by a healthy margin over his rival, the state’s Democratic attorney general, Jack Conway.
In addition to disbanding Kentucky’s “Kynect” health insurance exchange, one of the key planks in Bevin’s campaign platform was reforming the state’s public worker pension systems.
That promises to be a heavy lift.
Data compiled by The Pew Charitable Trusts, current as of July of this year, shows liability and debt figures for U.S. state pension systems for 2003 through 2013, for all of the 50 states.
In 2013, Kentucky ranked 49th in terms of how well its pension accounts were funded—in other words, second-to-last. The only state worse off was Illinois.
Trends in the numbers have not been looking good either.
The overall funded ratio for the state’s public sector retirement systems dropped from 88.3 percent in 2003 to 44.2 percent in 2013, according to the data. Meanwhile, pension debt has climbed from $2.8 million to $23.4 million between those years.
To rein in costs, Bevin is looking to put a freeze on adding participants to the state’s pension plans, and instituting a new 401(k)-style, defined-contribution plan for new hires.
Unofficial results on Wednesday showed Bevin defeating Conway by a 52.5 percent to 43.8 percent margin, a difference of roughly 84,764 votes. Bevin ran as an outsider, and support for him within the GOP establishment was muted at times. The size of his win came somewhat unexpectedly, with polls leading up to the election showing Conway with a narrow lead.
Last year, Bevin mounted an unsuccessful Tea Party bid against U.S. Sen. Mitch McConnell, who was up for re-election. He won this year’s Republican gubernatorial primary by just 83 votes.
Bill Lucia is a Reporter for Government Executive’s Route Fifty.
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