As the state considers options to shore up the Kentucky Teachers’ Retirement System (KTRS) amid severe underfunding of the pension plan, the Kentucky Chamber offered some potential structural changes to the system that could be paired with additional funding.
In a Friday meeting of the KTRS work group established by Gov. Steve Beshear to examine options for the system, the Kentucky Chamber and others offered testimony and shared their thoughts with the group about what should be done moving forward.
Kentucky Chamber Senior Vice President of Public Affairs Bryan Sunderland testified in front of the group, noting the efforts made by the Chamber in recent years to address the pension issue and stressed the importance to business community that the state’s retirement systems remain solvent.
“To make KTRS sustainable moving forward, the Chamber believes that this working group should look beyond simply providing more funding to the system, which is clearly needed, and consider structural changes to the system as well. The system must be sustainable moving forward,” Sunderland said.
Changes that Sunderland said the group should be considered for newly hired teachers are those made by other states, as well as for KRS in 2013, which include:
- Imposing a minimum age for retirement;
- Revising COLAs for future retirees;
- Increasing the employee’s contribution for retirement; and
- Revising benefits, such as moving to a hybrid or defined contribution plan.
“The Chamber’s interest is not to cast aspersions, assign blame or add fuel to any political fires. In the private sector, true leaders look at the facts, do the math and look for commonsense solutions. We are here to suggest the best way forward is to take this sort of approach and let the facts drive the decision,” Sunderland said.
Watch Sunderland’s full testimony in the video below:
Kentucky Chamber President and CEO David Adkisson, a member of the KTRS work group, also spoke on behalf of the business community to note the dire situation the state faces if something is not done to address these issues within the systems.
Adkisson noted the many calls by the Kentucky Chamber to start looking for solutions to the problems within the pension plans in past years that went without attention from much of Frankfort.
“In 2014 there was a rallying cry from the education community to get teachers’ salaries back up to the pre-recession levels. And the Kentucky Chamber proudly joined that cry and said yes…it is time to do that if at all possible. At the same time, the Kentucky Chamber was calling for a review group like this to look at KTRS. And to be blunt, Frankfort was conspicuously silent,” Adkisson said.
“So here we are today, we are all in the room. I think it is safe to say we are all very interested in education and we all would agree that anyone with walking around sense would say ‘yeah, paying teachers and their benefits is a big part of education. So that I don’t think is the issue. But there are practical trade-offs to solve this problem and get the retirement system on a sustainable footing in whatever structural format we can agree to.”
Watch Adkisson’s full remarks below:
Teachers and others in education also spoke at the meeting about the hardships faced by the state’s educators in retirement and the stress the problems in the state have brought to the education community in the state. To see full coverage of the meeting, watch video of the full meeting when it is posted on the KET website.
Defined benefit pensions have vanished from the private sector, probably forever. Common sense would suggest the private sector cannot continue to provide these kinds of pensions to the public sector. I believe a federal pension system equally available to all Americans will eventually be the best solution, that may take years/decades, and until then tweaks to current public pensions can no longer be avoided.