Officials with Kentucky's two major pension systems are sounding the alarm on spiraling unfunded liabilities at an annual business summit in Louisville.
While none of the state's pension plans, whether for teachers or state workers, are fully funded, one in particular stands out - what's called the KERS non-hazardous plan, or the largest in the state. That's the plan that earned the title of worst-funded in the nation from credit rating agency Fitch in 2014.
At the summit, Kentucky Government Retirees co-founder Jim Carroll said studies show a 5-8 percent chance of insolvency sometime in the next 20 years. And while that number isn't alarmingly high, he says without legislative intervention the plan is on track to become unsustainable.
"Our concern is that we'll reach a point where we would have to cash out all the investments in order to pay the current benefits," he says. "And if you do that then you no longer have a sustainable plan because all plans rely on investment income as the primary source of their benefit payments."
And if the General Assembly can't agree on solutions in 2016...
"Assets will continue to decline and it'll get worse and worse. If you hit a market skid, it could be disastrous," he adds.
It will be up to the legislature to juggle competing demands next session. While pensions may appear to be the chief fiscal threat facing the Commonwealth, higher education funding and the Medicaid expansion also weigh heavy.
Common Questions
Three speakers at Louisville's annual business summit spoke in defense of the state's adoption of Common Core academic standards, which they argued will help remedy the lack of skilled workers in Kentucky's job market. The advocates dismissed much of the criticism facing the guidelines as "political," but other Concerns remain.
While politicians like GOP gubernatorial candidate Matt Bevin blast Common Core as a top-down model that opens the door to federal encroachment on education at the state and local levels, others worry that the standards are putting too much control over testing and grading in the hands of corporations like Pearson, which has come under fire by critics for the quality and security of its products.
But Gene Wilhoit, CEO for the Center for Innovation in Education, says states will have more choices when it comes to testing... eventually.
"There have been concerns about the big testing companies getting stronger control and making a lot of financial benefit out of this," he says. "But what's really happening is that we're finding the emergence of some new testing companies coming into play that had not been in the business before, so I think it will probably end up being more competition."
Right now, Wilhoit argues, Kentucky should stay the course and keep Common Core in place. Whether it will remains an open question - one that could be decided when Kentuckians vote for their next governor this fall.
Meet the New Tobacco?
Kentucky BioProcessing, Inc., a small small Owensboro company, found itself shoved into the limelight in 2014 during the Ebola outbreak in West Africa after helping to produce a tobacco-based drug that was credited with saving the lives of two American missionaries. Now, company president Hugh Haydon says more testing is underway and he expects to see other tobacco products could be cropping up.
With smoking on the decline and hemp gradually coming online in Kentucky, the future the state's one-time signature crop is uncertain. But Haydon says tobacco could wind up having some surprising uses.
"Certainly we're a small company. There are a limited number of things we can do, but we're aware of other companies and institutions who are looking at other uses of the plant that can be positive," he says, "I'm confident that those things will develop. I'm confident that we're going to continue to try to do what we're doing and ultimately, hopefully, that's going to result in some really good things."
Kentucky BioProcessing is engaged in phase 2 studies on the compound used in the experimental Zmapp drug, but Haydon says he doesn't have a prediction for when the final results will come in.
Zmapp had only gone through trials in monkeys when a leftover portion of the drug was administered to two aid workers in Liberia, who both recovered.
