Meet Vicki Cunigan. Her daddy was a Kentucky state employee. Her mom was a Kentucky state employee. Her husband was a Kentucky state employee. She was a Kentucky state employee. And every one of them is enjoying a killer pension that is, indeed, killing the state budget.
She retired 10 years ago at age 50, after just 27 years on the job, to a lifetime pension of $40,000 a year, the Lexington Herald-Leader reported. But the state pension fund that pays her is going belly up. It is only 21% funded. This puts her $40,000-a-year lifetime pension in jeopardy.
"I'm angry and frustrated," she told the Herald-Leader.
Yes, I see.
Taxpayers are angry and frustrated. But not for the same reason. They likely are wondering how this happened to them. Why are they paying a perfectly healthy, able-bodied woman could "retire" at 50 to a $40,000 a year pension? What public good is served by shelling out $400,000 to a woman in her 50s to do absolutely nothing for the state?
Taxpayer also are wondering why they may soon be asked to float a $5 billion bond, not to build roads or schools, but to keep Vicki Cunigan's $40,000-a-year pension flowing.
West Virginia heard this same nonsense about borrowing money to fix pensions. In June 2005, shortly after he became governor, Joe Manchin asked voters to borrow $5 billion to bailout out the teachers pension plan. They told Joe to get bent. It was a 3-to-1 rout at the polls.
Voters would have rather voted on cutting those pensions back to something less extravagant.
But Democratic politicians refused to put that on the ballot.
Today, a decade later, West Virginia's pension funds are 64% funded. That's after 20 years of devoting nearly 10% of the state's budget extra toward the pension plan. Cut back on pensions? Why that is blasphemy. Democratic politicians made a promise 40 years ago to state workers -- most of them family and friends of the Democratic politicians. Now we pay.
Or so they think.
From the Lexington Herald-Leader:
Cunigan is paid from a fund called the Kentucky Employees Retirement System (Non-Hazardous). It has only 21 percent of the money it will need for future expenses — compared to 80 percent for the average state retirement plan in this country — and its funding is expected to drop as low as 15 percent in coming months. Starved for revenue, it's cashing out investments to keep payments flowing to retirees like Cunigan.
"I'm angry and frustrated," Cunigan, 60, said in a recent interview. "If something doesn't change to improve the funding, or if we get another recession, then I don't see how we can keep the retirement system going, especially for the younger workers."
Nothing will improve the funding this year for the Kentucky Retirement Systems, which cover 348,123 active, inactive and retired employees of state and local government. (Cunigan's pension fund is one of five under the KRS umbrella.) The 2015 General Assembly, set to end Tuesday, has taken no action to commit additional money to KRS, despite the recommendations of a pension oversight board and state retiree groups.
"Once they get into the next budget, next year, we realize the need for more pension funds is going to be in competition with a lot of other state services. That's why we wanted to get it sorted out now, and before this gets to a truly catastrophic level," said Paul Guffey, president of Kentucky Public Retirees.These benefits are over-the-top generous. Public employees in Kentucky and other states gamed the system to get jobs for their friends and family, and then to get pensions fit for a king.
She says, well, she paid 8% of her salary into the pension fund, and besides, she does not receive Social Security.
That's because she didn't pay that 6.2% Social Security tax for 27 years. The difference between her pension payment and what the rest of us must pay to Social Security is a whopping 1.8%. But the difference between what she hauls out of the government and what we get from Social Security is enormous.
First, the maximum Social Security benefit is less than $32,000 a year -- not $40,000 a year.
Second, you have to be 70 to get it -- not 50.
Third, no one collects Social Security, which for now is solvent -- not 21% funded like the Kentucky plan.
There is no reason for a 50-year-old bureaucrat -- she was an examiner at the Kentucky Department of Revenue -- to retire to a lifetime pension like that. None.
I can see cops needing an early retirement. I can see firefighters. I can see paramedics. Those are physically demanding jobs. At 50, they should be allowed their choice of a small pension or first dibs on a similarly paying job in state government until they can collect a full pension at 66.
Examiners at the Kentucky Department of Revenue retiring at 50?
Paying her $40,000 a year at 50 is not a pension; it is welfare. The money she put in does not justify such a windfall -- $1 million over 25 years, and her life expectancy was 30 when she retired. This is welfare for a select group of insiders, who parents and spouses all work for state government. They gamed the system to create this program, which is eating the state budget alive.
Taxpayers were never asked if they wanted to make this deal.
The Herald-Leader story went on to blame the politicians for not fully funding the plan, the stock market for crashing, and everything but the real problem: People like Vickie Cunigan retiring after 27 years at age 50. There is not enough money in the world to fund such a plan and still have good roads, schools and prisons -- you know, the actual reasons we set up a state government.