By John Cheves
Click here to view the full article
Gov. Matt Bevin’s administration wants a redo on an analysis of how much his proposed pension bill would cost the Teachers’ Retirement System of Kentucky.
The Bevin administration — which has blocked the release of a similar analysis of how much his bill would cost the Kentucky Retirement Systems — on Tuesday called on actuarial consultants Cavanaugh Macdonald to redo their work on an analysis for the TRS, which provides pensions for educators.
The original analysis, released last week, forecast that enacting Bevin’s bill would cost $4.4 billion more over 20 years. The proposal would switch future teachers to defined-contribution accounts rather than traditional pensions and aggressively step up the state’s annual payments toward the unfunded liability of the pension fund with a “level dollar” funding model. The analysis also predicted that the TRS pension fund would be less funded at the end of the 20-year period.
“Cavanaugh Macdonald’s initial analysis of the current pension proposal uses assumptions that are very different from those in its annual valuation reports, including significant changes in retirement patterns and an investment return assumption very different from the rate recently approved by the TRS Board,” the governor’s office said in a prepared statement.
“The request for the recalculation recognizes that there will be certain assumption changes based upon the pension proposal, but the changes by Cavanaugh MacDonald regarding assumed investment returns and future retirement patterns were significant departures from those used in prior valuations,” the governor’s office said. “Furthermore, while the statutes require a 20-year analysis, the state budget director will request the analysis be extended to 30 years so that the long-term effects of the pension proposal can be modeled within the 30-year amortization period contained within the legislation.”
The KRS Board of Trustees was scheduled on Monday to review its own actuarial analysis of Bevin’s 505-page proposed pension bill, but state budget director John Chilton — a Bevin appointee who sits on the board — said he would not release it. In a statement later Monday, the governor’s office said that analysis would be released at a later date after Chilton and his staff have a chance to review it and make appropriate changes to it.
Bevin has not yet announced when he plans to call a special session of the General Assembly to vote on changes to the state’s ailing pension systems.