Tuition prices and jobs on the line if the pension issue is not addressed for regional universities, EKU official says

As Kentucky’s regional universities and quasi-governmental agencies wait to see if the legislature will be called into a special session to deal with crushing pension costs and their impact on the budgets of those organizations, an official at Eastern Kentucky University (EKU) says the need for a resolution goes much further than just saving money in the school’s budget.

Gov. Matt Bevin sent a letter to all legislators on Wednesday laying out the changes he has made with legislative leaders to his pension proposal and stated he is ready to call a special session when they have enough votes to pass the legislation. If lawmakers don’t pass a bill by July 1, regional universities and quasi-governmental agencies will see their pension payments go from 49 percent of pay to the 84 percent being paid by other agencies in the Kentucky Retirement System.

In an interview with The Bottom Line, EKU’s Senior Vice President for Operations and Strategic Initiatives David McFaddin said the pension issue is the “single biggest threat” for the universities as well as other agencies participating in the retirement system as the contribution rates being paid by those groups has ballooned to an unsustainable level.

He noted that most contribution rates for employers in other retirement plans across the country are closer to 13 to 17 percent, illustrating the burden caused by the current 49 percent frozen rate being paid by the universities and quasi-governmental agencies for pension benefits alone, not including other benefits for employees.

Because of this, McFaddin says the universities are faced with very difficult financial decisions as pension costs crowd out other essential funding which could lead to layoffs and even increases in tuition prices for all the regional universities if something is not done to provide relief on this front.

As for what comes next on the issue, McFaddin says EKU hopes to see some sort of legislation passed before July 1 in order to help the universities budget and plan for the future. If a solution is not implemented before that date and the rates go up, he said tough choices will be ahead for many agencies.

McFaddin said he wants Kentuckians to understand this is a people-focused issue as the universities are looking to do what is best, not only for their employees as they seek to ensure they are in a sustainable retirement plan, but also for the students and communities they serve.

Watch the full interview with EKU Government Relations Executive Director David McFaddin here:

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Jacqueline Pitts
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