FRANKFORT, Ky. (LEX 18) – The state auditor has released his report on debt in Kentucky and, not surprisingly, the largest contributor is unfunded pensions.
According to Auditor Mike Harmon, Kentucky’s estimated unfunded liability for its retirement systems makes up nearly 80 percent of the Commonwealth’s total debt for 2018.
Of the $54.6 billion in total debt Kentucky had during the fiscal year, an estimated $43.3 billion of that was due to the unfunded pension and other post-employment benefit liabilities.
That means that Kentucky’s total debt is equivalent to a little over $12,000 for every person in the state.
“As has been widely known, Kentucky’s unfunded pension liability has grown for many years. But what many people don’t know is that the Commonwealth has additional debts of $11.2 billion in appropriation and non-appropriation supported bonds,” Auditor Harmon said. “As a result, the Commonwealth made more than $1.1 billion in principal and interest payments during Fiscal Year 2018 towards this $11.2 billion of bonded debt.”
The $54.6 billion in total debt equates to a burden of $12,261.58 for every man, woman and child in Kentucky, and a burden of $2,535.02 per Kentuckian for the Commonwealth’s $11.2 billion in bonded debt.
The report also points out that of seven states surrounding Kentucky, only Illinois has a worse rating for its General Obligation bonds. Illinois, like Kentucky, has a public pension system that is significantly underfunded. Indiana, Missouri, Tennessee, and Virginia had the highest possible ratings from the three rating agencies for bonds.
The entire data bulletin, “An Examination of The Outstanding Debt and Debt Service of the Commonwealth,” is available for review on the auditor’s website. This is the second data bulletin released by Auditor Harmon’s office, which serves to provide important information to Kentuckians about how their government operates.