The proposal by the Kentucky Senate to hold Teacher Retirement System (TRS) funds hostage in exchange for pension benefit cuts for new teachers is bad public policy for educators and the taxpayers.
During this national crisis, the Kentucky Senate budget presents a last minute deal to extort current and retired teachers into accepting a last minute pension legislation. The bill threatens to hold hostage than $1 billion in required funding over the next two years. This is morally wrong and fiscal train wreck because it drive up taxpayers costs by more than double, repeating the mistakes of the 2000s. This would force TRS to sell assets to pay retiree benefits and forego the opportunity to invest in stocks while prices have fallen due to the corona virus crisis – a lose/lose for education and Kentucky taxpayers.
Since 1985, TRS investments have paid the lion’s share of all retired teacher benefits and administrative expenses. The TRS defined benefit plan provides retirement security for educators at a lower cost to taxpayers than would switching to a 401K scheme and moving teachers into the financially unsound Social Security program.
The Kentucky Senate proposal not only punishes TRS for its successful management of the pension system through the great recession, but also eliminates funding for the under 65 retired teacher health insurance plan. The under 65 health plan for teachers is funded at 46% – in stark contrast to the retired legislator’s health insurance plan funded at 255.1%.
The Kentucky House has proposed full funding of the TRS pension plan and funding for the under 65 health insurance that depends on an appropriation in the first year and using surplus money in the second year of the budget.
Legislators are meeting behind closed doors over the next 10 days to reach a compromise between the House and Senate proposals.
Call your legislator and DEMAND adoption of the House proposal for TRS funding in the HB 352 budget conference report.
