“One of the things I’ve learned in the last few months is how much of a cost driver pensions are for WKU,” Caboni said. “In one of our pension systems, the university’s contribution in the past decade has gone from eight percent of an employee’s salary to 48 percent.”
Dr. Caboni says pension obligations are consuming a lot of university revenue that could be devoted to other areas on campus. As a result, Kentucky’s public universities have begun considering a possible exit from the state’s retirement system. The plan has gone to the Kentucky Council on Postsecondary Education.
As lawmakers prepare for a special session on pension reform, President Caboni says action must be taken to honor promised benefits to current university employees, but at the same time, schools must consider creating pension plans of their own for new hires.
He says that might include moving from defined benefit plans to defined contribution plans, similar to what the Universities of Kentucky and Louisville already offer.