Pension Reform in 2015?

Kentucky legislators will consider a number of plans designed to reform the state’s pension plan for teachers, the Courier-Journal reports.

The Kentucky General Assembly has been tinkering with the pension plan in recent years in an attempt to shore up unfunded liabilities.

Proposals this year would seek to adjust future benefit payments and decrease cost-of-living increases.

The shortfall is a result of lack of proper funding over time by the General Assembly.

Some proposals would continue the practice of using borrowing through bonds to fund pension obligations, but it is likely that changes to benefits will also be required.

According to the report, a number of lawmakers oppose additional bonds to fund the system and are looking at more significant reform.

From the story:

So far, legislators have pre-filed at least four bills that would alter some aspect of teacher pensions, and leaders from both the House and Senate say any bonding needs to be paired with reforms.

“There is not a lot of enthusiasm for borrowing more money to pay off the KTRS debt without structural changes accompanying that effort,” said Senate Majority Leader Damon Thayer, R-Georgetown.

 

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Jeff Hoover on Teacher Pensions

House Republican Floor Leader Jeff Hoover attempts to use teacher pension reform as an argument in favor of electing a GOP majority to the Kentucky House.

In an article for the Courier-Journal, he points out:

The Comprehensive Annual Financial Report issued by KTRS this past December shows the system had approximately 75,000 active and 47,000 retired members. The report states the funding level this past year was 51.9 percent, with $13.85 billion in unfunded liabilities. According to data released by the Kentucky Chamber of Commerce this past week, a key reason for this underfunding is actual employer contributions to the system have been significantly less than the amount required to sustain financial obligations.

Hoover is right to note that the teacher pension system may soon face problems. Not being able to pay benefits promised and owed would be devastating.

And, in his article, he’s simply calling for the creation of a task force to examine the issue and make recommendations.

That, too, seems reasonable.

Fixing the pension problem won’t be easy and it will take political courage.

But, let’s be clear: Teachers are not the ones who failed to properly fund the pension system for years and years. Teachers did not make promises they couldn’t meet. Teachers should not bear the brunt of any proposed pension reform. The budget in Kentucky should not be balanced on the backs of Kentucky’s teachers.

Comprehensive reform that ensures the teacher pension fund is able to meet future obligations must include proper funding of those obligations. That will mean that new revenue must go to the fund OR that other programs are cut to make room in the budget for teacher pensions.

Kentucky made a promise to its teachers. Kentucky’s political leadership should keep that promise.

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The Pension Petition

The Jefferson County Teachers Association is out with a Change.org petition calling on Governor Beshear and the Kentucky General Assembly to fully fund the pension fund (which they haven’t done since 2008).

As of this posting, they already have over 9000 signatures.

No doubt, many teachers and their families will be joining the fight soon.

For more on Kentucky education politics and policy, follow us @KYEdReport