On Oct. 18, 2017, Governor Matt Bevin and members of the Kentucky House and Senate leadership revealed their plan for a new bill meant to address funding problems with the state’s pension system.
Read the state’s plan here:
Frankfort’s New Plan
Bevin’s Full Press Conference
Read the KRTA’s response to the pension proposal.
In the weeks after a plan for pension reform was revealed in an October press conference, as noted above, Gov. Matt Bevin and Frankfort legislators have since withdrawn the pension reform bill. The governor and other leaders have been meeting behind closed doors to continue to make changes to the bill, and as of this date of the publishing of this article no new version has been released to the public.
An independent analysis of the proposed bill for TRS found that it would cost Kentucky taxpayers $4.4 billion compared to if legislators were enact no pension reform whatsoever but continue to fully fund the system as they did in 2016. After moving to continue making changes to the pension reform bill behind closed doors, Gov. Bevin’s administration asked for a re-do of the analysis that showed this $4.4 billion price difference. Following that, a new independent analysis of the reform bill’s impact on KRS which was set to be released was instead withheld from the public by lawmakers. Meanwhile, experts who have had a chance to evaluate the TRS analysis of the proposed switch from pensions to 401(k)-style plans said the $4.4 billion number shouldn’t “be surprising to anybody that understands how these proposals work.”
Neither that KRS analysis, nor any new pension reform bill are currently available to the public. Recent evaluations indicate that the governor may call a special session to pass this pension reform as soon as December 18.
The reform bill that was available for a short time, before being withdrawn, talked about options such as COLA suspensions and switching teachers to a 401(K)-style retirement plan as a way to solve the unfunded liability with the state retirement system. However, states which have made those types of changes have found their problem only got worse, and a plethora of evidence indicates that pension plans are both less costly to taxpayers and provide more benefits to retirees than traditional pension plans.
Part of the proposed reform includes COLA suspensions, but this would cost retired teachers tens of thousands of dollars over their lifetimes. Teachers are encouraged to use the COLA calculator found here to calculate the actual impact that COLA freezes would have on their lives individually.
The KRTA recently released a set of talking points to better assist teachers and supporters around the state in having better conversations to stress the importance of a pension-style system, instead of a 401(K) style system. The talking points are meant to help provide background and facts when engaging with both legislators and members of your community in meaningful discussions to understand this complicated issue.