The 2024 General Assembly was good for Kentucky’s retired teachers. The biennial budget fully funded the TRS pension request and fully funded retiree health insurance as stipulated by the Shared Responsibility plan passed in 2010.
This ensures that TRS will have been fully funded by the General Assembly for 1O consecutive years. House Bill 1 also contains $80 million, $40 million each year of the biennium, to pay down part of the unfunded liability at TRS.
KRTA also successfully lobbied to have TRS annuitants who are Medicare-eligible and their dependents exempted from Senate Bill 188. This ensures our members will continue to see low cost prescription drug benefits.
KRTA passed the 2025 Legislative Priorities at the recent KRTA Delegate Assembly in Louisville on April 23, 2024. Our legislative priorities mirror last year’s priorities. It is vital we keep these priorities in front of our elected officials.
I. Fully fund the Teachers’ Retirement System (TRS) in accordance with the state’s pension- contribution statute. (KRS 161.500).
We thank the Kentucky General Assembly for fully funding TRS since 2016. We urge the General Assembly to continue this fiscally responsible practice moving forward. By fulfilling the state’s actuarially required contributions, TRS solvency will continue to improve until the system becomes 100% funded. Investment income, not tax dollars, pays for the vast majority of TRS’s pension benefits. Foregoing the Commonwealth’s financial obligation to the pension system, while saving the state money in the short-term, will in the long run cost Kentucky’s taxpayers double any saved amount over a 10-year period due to the loss of investment income.
II. Maintain the defined benefit system currently in place for Kentucky’s retired, current, and future teachers.
Since teachers are ineligible for Social Security benefits, payouts from TRS are the only income Kentucky retired teachers receive. Defined benefit (DB) retirement plans are 40% less expensive and more efficient than 401(k)-style defined contribution plans. DB plans are the most effective and efficient way to ensure a dignified retirement for teachers as well as the best way to attract and retain new educators for the state’s public-school systems.
III. Fully fund the statutorily required obligation to the TRS Medical Insurance Fund as required by HB 540, the 2010 Shared Responsibility Law (KRS 161.550 and 161.420).
In 2010, Kentucky’s education community came together with elected officials and crafted a plan
to ease the healthcare liabilities on Kentucky’s taxpayers and to ensure affordable healthcare access for active and retired teachers. Since its founding, the Shared Responsibility Law has saved taxpayers hundreds of millions of dollars while providing good medical benefits to Kentucky’s retired teachers. We thank our legislators for fully funding the state’s obligation for the Shared Responsibility Plan (Retiree Health Insurance) and ask that they on this fiscally responsible course.
IV. Maintain the current TRS board structure.
TRS members directly elect the majority of its board members, a process which ensures accountability. The legislative and executive branches of government oversee TRS through the agency of the Public Pension Oversight Board (PPOB). Changing the member-elected TRS board structure could result in the loss of TRS independence, thus exposing TRS to some of the same issues that have plagued Kentucky’s other retirement systems.
V. Oppose atty legislation that would result in higher prescription costs for Kentucky’s retired teachers.
Kentucky’s retired teachers live on a fixed income, one that averages less than $40,000 in benefit payouts annually. With inflation a constant, legislation resulting in higher prescription costs could result in thousands of retired teachers becoming economically vulnerable.