Teachers’ group draws “line in the sand” on pension reforms

As Kentucky lawmakers continue to grapple with how to address the state’s struggling pension systems, education groups told the Public Pension Working Group on Thursday they want to see little to no changes to the teachers’ pension system and continued additional funding into the system by the legislature.

In recent years, the General Assembly has contributed billions of dollars into the Kentucky Teachers’ Retirement System (KTRS) to cover the normal costs of the plan and additional funds requested by the system. In previous meetings of the group, testimony has revealed that the additional money is helping the system, but the unfunded liability of KTRS has not declined in that time period.

Stephanie Winkler, the representative for the Kentucky Education Association (KEA), said her organization strongly believes the state should continue with the defined-benefit pension plans for KTRS and stated KEA doesn’t see any room for negotiation on this item. She stated that the pension is a retirement and social security replacement and it is “all they have.”

To this point, many legislators on the group brought up that the reform plan presented in 2018 took the fact that teachers don’t receive social security into account and would have provided a comparable benefit and quoted the head of the Jefferson County Teachers’ Association who said last year the hybrid plan could have resulted in a better payout for teachers than the current pension plan.

When asked if KEA would like to see future teachers placed into social security as it is a large topic of discussion when it comes to benefits, Winkler said she does not see that as appropriate for Kentucky and noted not only the costs to the state and the “ballooning” issues within social security that bring benefits from that system into question.

Public Pension Working Group Co-Chair Wil Schroder expressed disappointment that KEA began the meeting with a “line in the sand” with the statement they don’t want anything but the defined-benefit pension plan and encouraged everyone to come to the meetings with an open mind so that a reasonable solution can be reached.

The money being put toward the system was also discussed as Winkler said the state should continue to put increased amounts into the pension plan but several legislators stated there are many aspects of the state budget that need money and there is little revenue to go around, noting that tax reforms were made in 2018 to help cover some of these additional costs. Winkler argued that the state gives out billions in tax exemptions, to which Senate Majority Leader Damon Thayer countered with the fact that the state’s largest exemptions are things like groceries, pharmaceuticals, medical insurance, and other items not being taxed in Kentucky where it is in other states.

Other education groups including the Kentucky School Boards Association, the Kentucky Retired Teachers Association (KRTA), and groups that represent superintendents and school administrators also testified in front of the Public Pension Working Group.

The education groups discussed the critical role education plays in the state and the importance of being able to attract and retain teachers and thanked the group for the chance to testify and welcomed the opportunity to be part of the conversation about potential benefit changes moving forward, pointing to the process used with all stakeholders at the table to make changes to teachers’ health insurance changes made in 2010 with a new “shared responsibility” model.

When asked by Rep. Wheatley why many retired state employees or teachers are so adamant to keep the plan as it is for future teachers when it doesn’t impact them, KRTA Executive Director Tim Abrams said retired teachers saw opportunities come along in their career to move to the private sector and triple their pay but decided to stay in their role due to the retirement benefits, citing it as a retainment issue.

The working group also heard from KTRS official Beau Barnes as they continued the discussion on why the state is struggling. The group looked at contributing factors of the unfunded liability by percentage, and lawmakers highlighted that the contributions from the General Assembly were a smaller contributing factor of the unfunded liability, according to the system’s numbers.

The Public Pension Working Group will meet again on Tuesday and Thursday of next week to begin discussions on the Kentucky Retirement System covering other state employees.