New Acting House Speaker David Osborne says he hopes to bring calm and stability to his new role as the legislature works to tackle difficult issues like pension reform and craft a new two-year state budget among political turmoil.
The new Acting Speaker noted many members of his caucus expressed concerns about the prospect of a special session in the coming weeks to tackle pension reforms, especially as a bill has not been completed and will not be available before asking members to cast a vote.
When asked if an agreement could be drafted into bill form and scored by actuaries to give the financial information on any reforms in time to pass within the first couple weeks of the 2018 session, Osborne said that process is already “substantially complete” and should allow time for public input before a vote.
“I think we absolutely do have time to get that bill, get some sunlight on it and let the public weigh in on it, get that information to our members and allow them to interact with their constituencies—albeit over the holidays, it’s not going to be the best time to communicate, but at the same time people are able to focus on things during the holidays. So I think they are going to come in here with enough knowledge and information to go ahead and act on something,” Osborne said.
Osborne added reforms have to be made in order for the state to move forward as the pension crisis continues to impact all areas of state government.
“It is a horrendous pull on our state budget. This is going to be probably the most difficult budget that certainly I’ve ever been through, and quite possibly the most difficult budget in modern history, regardless of what we do with pension reform,” Osborne said. “But we can’t continue to allow the unfunded liability of the pensions to be this incredible drag on our budget. We don’t have the revenue in this state, no matter what we do in tax reform or revenue enhancements, there’s no way we can possibly come up with enough money to continue to substantiate this type of unfunded liability.”
Along with the significant policy challenges facing the legislature, the House Republicans have experienced controversy in recent months as the former House Speaker stepped down among harassment allegations. As a result, the House Republican caucus announced last week that Osborne would serve as Acting Speaker in 2018 and the rest of the leadership team would also remain in place.
Osborne told The Bottom Line the leadership team felt the decision was the best way to move forward and keep the caucus united in the coming year. He added he hopes to bring some calm and stability in his new role.
“We have had quite a bit of turmoil and controversy and I think it’s important to provide some calm to the process and give some confidence to the people of Kentucky that we are here to do business,” Osborne said.
Watch the interview segment in the video below:
More of this interview with Speaker Osborne including discussion of the budget, tax reform, and other 2018 legislative priorities will be posted later in the week on The Bottom Line.
Folks, this stuff is not that difficult.
One of my passions is to calculate possible financial retirement scenarios. This morning I wondered, if a person contributed, say, 12.855% (this is the current mandatory contribution for some public employees into their public pension system) into a 401k account what would be the results?
This is just for the sake of an example. Consider a new teacher starting at age 25 and retiring at 60. (401K funds can be withdrawn at age 59.5 years of age)
Assume a starting salary of 35K and a final salary of 55K for an average over career salary of 45K. (In my opinion this a very conservative number)
On 45K the average monthly contribution would be $482.00.
Using a fund presently offered through the Kentucky Deferred Compensation plan, FCNTX. It has an average annual return rate of 12.46% since it’s 1967 inception date which makes it 50 years old.
Start at age 25
Retire at 60
Start at age 25 with zero savings
Contribute $482 monthly
Rate of return, 12.46%
Remember that this 50 year old mutual fund has been through at least two major market crashes, 1999-2000, 2008 and several lesser corrections.
The estimated balance at age 60 is $3,129,362.00. (yes, over 3.1 million)
Also remember that I did not include any other income source going into the calculations, just the 12.855% contribution. So a matching amount would increase the total.
To take this one step further. At age 60 move the $3,129,362 in to a bond fund such as Vanguards Vanguard High-Yield Corporate Fund Investor Shares, VWEHX, which takes the account balance from a risk 5 to a risk 3. Using Novembers dividend distribution for VWEHX of .02404 cents per share at a share price of $5.93. $3,129.362 would equal 527,717 shares.
Multiply the .02404 cent per share dividend distribution by the 527,717 shares would yield a monthly dividend payout of $12,686.00 per month or $152,235 dollars per year. One could live high on the hog on this dividend and never touch the 3 million dollars account balance.
Please don’t deprive individuals of this golden and unbelievable opportunity. This could benefit themselves and their heirs for generations. For many this will be the only opportunity to accumulate this kind of wealth. Please don’t blow it for them.