Saying it could save the city millions, Republican Louisville Metro Councilman Jerry Miller is filing a resolution that seeks to remove the city from the Kentucky retirement system.
The non-binding measure will be considered later this week and requests the General Assembly revise state law to separate the County Employee Retirement System account from the overall state pension pool.
It also asks state lawmakers to give CERS an independent board from the Kentucky Employee Retirement System, which has been under a myriad of criticism for its management and financial woes over the past few years.
“Our costs continue to skyrocket in part because (the state system) is making decisions based on the KERS plan covering state employees, which is the second worst funded in the nation,” says Miller.
The city’s retirement costs have increased significantly over the past decade.
In 2004, pensions accounted for just over five percent of the city budget. Now about 15 percent of the Metro Government general fund is spent on retirement payments for public employees.
Rising pension costs were at the forefront earlier this year when state agency Seven Counties Services, which provides mental health services, filed for bankruptcy to find “relief from the burden of unsustainable” retirement system contribution rates.
And two quasi-governmental state agencies—one in Morehead and another in Whitesburg—filed a lawsuit to abandon Kentucky’s retirement system last month.
Miller, who is running for the state House next year, says his resolution is aimed at improving the city’s long-term financial health and not an attempt to collapse the retirement system as some critics have suggested.
“CERS is being overcharged by at least 30 percent. Louisville Metro could save as much as $10 million annually if CERS were separated and managed professionally,” he says.
“KERS is a sinking ship that threatens the financial future of Metro Louisville and its retirees. The sooner CERS is freed from that titanic failure, the better.”
The measure is being co-sponsored by fellow Republicans Ken Fleming and Kelly Downard. No council Democrats have signed on to the resolution.
Miller’s proposal will receive its first reading during the full council meeting this Thursday and will likely be assigned to the Intergovernmental Affairs Committee.