Governor Recommends Extending CERS Phase-In to Ky. Retirement Board of Trustees

Dec.30, 2008


In a press conference this morning Governor Steve Beshear urged the Kentucky Retirement Systems (KRS) Board of Trustees to move ahead with policy changes that would extend the phase-in period for reaching the actuarially required contribution (ARC) for employers participating in the County Employees Retirement System (CERS).

This administrative action would allow cities, counties and other agencies in CERS to reach their full contribution obligations over a 10-year period instead of the five-year time frame currently required by the KRS Board of Trustees.  KRS has provided information on how the extension of the phase-in would impact employer contribution rates in each fiscal year.

The extension would reduce the contributions required of employers by 1.21 percentage points for non-hazardous duty and 2.64 percentage points for hazardous duty in FY 2010.  Actuaries with the Kentucky Retirement Systems have determined the extended phase-in period is fiscally sound and would provide about $37.5 million in savings to the agencies participating in CERS next fiscal year. Using the KRS figures, KLC estimates cities would save approximately $11 million in FY10. 

“I’m recommending that the Kentucky Retirement Systems Board adopt the 10 year phase-in.  This would sharply remove the burden on cities, counties and school districts as they try to balance their budgets by July 1,” said Governor Beshear.

Governor Beshear also indicated the administration will support legislation pre-filed by Rep. Mike Cherry (D-Princeton) to require KRS to use the extended phase-in period if the KRS Board of Trustees fails to act.

KLC Executive Director/CEO Sylvia Lovely, KLC President and Richmond Mayor Connie Lawson, Madisonville Mayor Will Cox, Lexington Mayor Jim Newberry, Louisville Mayor Jerry Abramson and Princeton Mayor Gale Cherry attended the press conference to support the Governor’s call as one part of the overall need for retirement reform.

“The backs of local governments are against the wall, and every fraction of a percent that can be reduced from employer contribution rates really counts in financially trying times like these,” said Lovely.  

The extension of the phase-in period is just one component of needed reform.  Even with the extended phase-in, cities would still face an estimated $17.5 million increase in employer contributions in FY10 without additional legislation during the 2009 session.  Therefore, KLC remains committed to pursuing legislation to provide immediate rate relief in the 2009 session, including the establishment of an 80-85 percent full funding standard.  KLC and the Kentucky Association of Counties have also hired an actuary to fully evaluate all phase-in possibilities and advise local governments on other potential legislative options, including the full funding standard. 

“Our options for rate relief are limited in light of the inviolable contract that we are committed to honoring for our employees and retirees,” said Lovely.  “Cities readily embrace this effort as one of the few measures that could promise cities savings on escalating retirement costs, but we are painfully aware that more must be done to make this system sustainable.”

Please watch your inboxes on Fridays during the legislative session for the Legislative Bulletin that will provide you with regular updates on this issue and other legislative actions.   We will periodically email you Legislative Alerts for urgent issues that need your immediate attention.  If you have any questions, contact J.D. Chaney at 1-800-876-4552 or



Comments are closed.