In light of Kentucky Gov. Matt Bevin’s veto of a bill seeking to allow state universities and other government entities to exit the state’s ailing pension system, KET Kentucky Tonight host Renee Shaw and guests discussed what comes next on the pension issue.
In recent interviews with The Bottom Line, legislative leaders noted the need to pass a solution in a special session sooner rather than later as universities aim to have their budgets crafted by June. David McFaddin, executive director of government relations at Eastern Kentucky University, echoed those sentiments on the program Monday night.
“We’re up against the wall. We need that decision point sooner than later,” McFaddin said. “It’s critical that we address this now.”
McFaddin also noted escalating pension costs continue to be the single biggest challenge facing the state’s regional universities and stated there will be no employment or service growth at the institutions if a solution is not passed.
On the bill passed during the 2019 session, Senate Majority Leader Damon Thayer stated, “This will cost the system money. But this is the least worst of bad options, and we have to have those back-end reforms because as legislators we are supposed to take the long view and when you reduce the risk on the employer eventually you have a more sustainable system. That’s why we’ve got to get those back-end reforms.”
Thayer said he will soon be pre-filing a bill for the 2020 session which will impact only the Kentucky Teachers’ Retirement System (KTRS) and not touch retirees of the plan but would place future teachers in a hybrid cash-balance plan, similar to what was done to the Kentucky Retirement System (KRS) in 2012. The pre-filed bill would also address things outside of the inviolable contract for current teachers including sick leave payout, applying the salary factor to the highest 5 years of salary instead of 3 years, and removing the current benefit multiplier that applies at the end of a teachers’ career.
“We need to have a system that requires teachers to work longer. We cannot have people retire at age 50 to 55. It’s just not sustainable,” Thayer said.
Kentucky Chamber President and CEO Dave Adkisson said there are many different approaches currently being discussed when it comes to reforming the pension systems but a real, sustainable solution will require compromise from all parties.
“It is a process by which you compromise and you come up with a product hopefully is better than what you have and builds in a more sustainable system down the road,” Adkisson said.