By RONNIE ELLIS
One day after Standard & Poor’s Ratings Services downgraded Kentucky’s fiscal outlook because of its unfunded pension liabilities, a coalition of business groups used the news Friday to press lawmakers to pass a package of pension reforms.
S&P announced the downward revision, from stable to negative, on Thursday, and at the same time affirmed its AA-minus credit rating for the state’s credit rating.
“The outlook revision reflects our concern over pension funded levels, which have declined and are likely to continue declining due to lower-than-actuarially required funding of pension liabilities and budgetary pressures associated with funding post-retirement benefits,” S&P credit analyst John Sugden said in a press release.
The Kentucky Employee Retirement System faces unfunded liabilities of $18 billion. When the state’s other major pension systems for teachers, county employees and state police are included the unfunded liability grows to more than $30 billion.
The problem arose over time as lawmakers in flush years increased benefits and then in bad economic times deferred making annual payments into the system. At the same time, the economic downturn had a negative effect on the systems’ investment returns.
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