Kentucky Pension Crackdown Bankrupts Health Agency: Muni Credit
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When Kentucky last year required employers to stop shortchanging state pensions for the first time, its largest mental-health agency filed for bankruptcy.
Seven Counties Services Inc. in Louisville couldn’t pay the mandated 38.7 percent of payroll to the Kentucky Employees Retirement System, up from 6 percent in 2005, said Gwen Cooper, the agency’s lobbyist. The bankruptcy may let it escape obligations to the retirement plan, potentially costing other participants $100 million during the next 30 years, according to Moody’s Investors Service. If other agencies follow, that could swell to as much as $2.4 billion.