According to the Louisville Courier-Journal, the legislation would increase the time cities and counties have to fully fund their health care costs from five years to 10 years, reducing the annual rates they pay for retiree benefits. In its last session, the legislature reduced cities’ and counties’ rates for the current fiscal year, but they face a bigger tab in the next year, the newspaper said.
However, retirement officials say they are concerned that the proposal would cost cities and counties more money in the long run. Kentucky Retirement Systems Executive Director Mike Burnside noted less money invested means less returns generated.
“I don’t think we are talking about enough of a difference to hurt the viability of the long-term funding of the system,” Cherry said, according to the Courier-Journal. “But it is enough to make a little difference to cash-strapped cities and counties.”
The Kentucky Education Association also expressed concern about the proposal because it does not provide relief to about 4,600 classified school workers covered by the County Employees’ Retirement System on the contributions they make toward their retirement.
Similarly, New Jersey Governor Jon Corzine has proposed allowing local governments to defer about half of their pension payments for three years to help Garden State municipalities avoid steep property-tax increases (See NJ Governor Proposes Local Government Pension Relief ).