Imagine working at a local factory. They have a 401(k) matching contribution retirement plan. You put five percent of your salary into your retirement and the factory matches your five percent.
Imagine after 20 years of working at the factory, you find out your employer did not put their share of money into your retirement plan. Not only is your retirement plan under-funded, but it did not draw as much compounding interest for years. Now imagine your employer tells you that you must increase your contribution from 5 percent to 8 percent to help compensate for all those years they neglected to pay.
This is an analogy of what has happened to create the Kentucky pension crisis. Local governments (city and county) have a matching contribution retirement plan. The county and the state pay into the employee's retirement plan, but for years, and even decades, the state did not pay their share. (The current administration is the first one in a while to properly fund the state pension.) What made the situation even worse was a gamble in unwise retirement investments which lost millions.
Solution: Have the counties pay more to make up for all those years of state neglect and poor decisions. This means that counties are required to increase their retirement contribution 12 percent each year for the next four years. That adds up to a 48 percent increase in retirement contributions for local counties. An example is a county that is paying $500,000 a year in retirement would increase to $750,000 in four years.
The "four-year phase in process" does allow counties to slowly make cuts and find ways to absorb the impact, but counties will still struggle to find solutions. You can look for counties to cut some services and hire part-time people to avoid paying benefits. The Caldwell County Fiscal Court is committed to finding ways to save money where ever possible to avoid increasing revenue. Taxpayers should always expect us to make the most of their money and spend it prudently.