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Mayor: Pension Problems Will Affect Hiring of Police, Firefighters, Others in Covington

Covington Mayor Sherry Carran joined other city leaders this week from across Kentucky, including the mayors of Louisville and Lexington, in calling for reform to the state pension system. The Kentucky General Assembly is expected to take action in its recently convened short session to address the growing problem.

"It was a very good meeting," Carran said of Monday's news conference. "Mayor (Greg) Fischer (of Louisville) and Mayor (Jim) Gray (of Lexington) are just amazing, so I think between the two of them and the Kentucky League of Cities, I think they've got an organized effort to get our legislators to vote on some kind of significant reforms this time around, so it looks like it may happen."

The sense of urgency for reform has grown as cities watch more and more of its income spent on pension contributions. 

"Right now in 2012 we're having to pay thirty-five percent of employees salary into the pension system (for hazardous duty employees). For non-hazardous it was almost nineteen percent," Carran said. "By the year 2016 we will be paying almost forty-four percent for hazardous and almost twenty-two for nonhazardous, so it's just getting to the point where you're not going to be able to bring on as many employees and you know how many we had to cut this year."

Mayor Gray had a stark warning about the future of cities. He told the Lexington Herald-Leader:

"For Lexington and Kentucky, if ever there was a 'going out of business' model, this is it," Gray said. "Our pensions are unsustainable. There is no more kicking the can down the road."

The most immediate concern is that the state faces a nearly $14 million unfunded liability to the pension system. While the nearly twenty mayors gathered in Frankfort Monday did not call for specific changes to the system, some popular suggestions include a reduction in retirement benefits and a larger infusion of cash from the state into the system, according to the Herald-Leader report.

"Our budget in 1998, we were contributing $2 million a year into pension and we're up to almost $6 million a year which is more than twelve percent of our budget, so what's happening is that cities are having to reduce services to pay for increased pension costs and it's going to get to a point where there's reduced services. They are going to have a significant impact on how cities function."

In December, a legislative task force analyzed the state pension system. The group of legislators, chaired by State Senator Damon Thayer (D-Georgetown, who represents southern Kenton County and South Covington) met six times over a 5-month period and focused its efforts on evaluating the Kentucky Retirement Systems (KRS), which administers three separate retirement systems for state and local government employees and retirees. These retirement systems include the Kentucky Employees Retirement System (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS).  They issued a report in December.

Still, though, no one knows for sure what reform will look like and that leaves cities like Covington waiting and wondering if more cuts are on the horizon. "At some point, there's going to be 'what services are most important,'" Carran said. "Mayor Fischer made that comment. They look at their services and what they're providing. You've got the people there but they're stretched so thin they can't accomplish anything." 

One particular area of concern for Covington is the police department which cuts its budget by half a million dollars this fiscal year mostly through a reorganization. Residents have frequently called for more police presence on certain city streets, a call that cannot be answered yet. "Last time we asked (Police Chief) Spike (Jones) how it's working with the changes that we made, he said he thought things were good for now," Carran said. "But how long that continues, I don't know." The mayor said she hopes to meet with the chief, city staff, and the new city commission to evaluate how the changes to the police department have worked.

 

Other departments also felt the pinch. The fire department had to cut its budget by the same amount of money and did so through retirements while the public improvements department lost nine employees and may be the most stretched department in the city. "We're down nine employees and they're all stretched thin," Carran said. The mayor has lobbied for the hiring of a municipal arborist in the department who would also serve as a supervisor. "The last time I heard a couple months ago, back orders on trees (that need to be attended to), we were behind like two hundred trees because they were on back order. That's just one piece of it."
 
"It's not anything that almost every city in the country is experiencing. Some hard decisions have to be made." Carran expects that employees will have to put more into the system and she says that union leaders have expressed interest in working toward that. Changes to the contributions would likely mostly affect new hires and not current employees, the mayor said. And, "Do we ask people to work longer, more than twenty years?," Carran asked. "You've got people now retiring in their early forties, so that would be another thing."
 
"Staff will start meeting with union leaders so that when we go down to lobby we can show that we are unified and they know that changes will have to come in order for the system to be viable," Carran said. "I think the numbers that we're seeing, I don't think anyone knew how bad it was and who's paying for this are the taxpayers. When we don't have a system that is running correctly it's the taxpayers having to pay for it and consequently losing services that they actually need: police, fire, public improvements. Those are services they think their money is going towards when it's really going toward the pensions."
 
Written by Michael Monks, editor & publisher of The River City News
Photo: Covington City Hall/RCN file
 
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