**ACTION ALERT** Senate Budget Issues 3-19-20

The budget proposed by the Kentucky Senate completely ignores the state’s fiscal obligation to Kentucky Teachers Retirement System and the TRS Medical Insurance Fund

During these unprecedented times, I want to extend my thoughts and prayers to all of you and your families. We teachers are tough bunch, and I’m confident we will get through this situation and become even stronger because of it.

I wanted to call your attention to troubling developments in the legislature and hope you’ll have time to contact your elected officials either today or tomorrow.

The Kentucky Senate A&R committee has passed its version of the biennial budget and it will go to the Senate floor for a vote as early as either later today or tomorrow. While we are still digesting the Senate changes, this budget is essentially ignoring all of its fiscal obligations to the both the Teachers Retirement System (TRS) and the TRS Medical Insurance Fund.

• The proposed Senate budget completely ignores the Legislature’s obligation under the Shared Responsibility Act of 2010 to fund the TRS Medical Trust Fund over the next two years. Instead, it requires TRS to pay the state’s portion of funding for single coverage out of the existing fund.
• The proposed budget also puts $551 million in the first year and $579 million in the second year in the Kentucky Permanent Pension Fund instead of fully funding TRS unless pension reform is enacted.

Why this is both fiscally and morally wrong:

 

• Once again, in a time of crisis, Kentucky is choosing to use the Teacher’s Retirement System as a line of credit to fund other priorities. This is the very same practice the Legislature employed during the 2000s that made the Kentucky pension system among the worst-funded systems in the country.
• Ignoring the state’s pension-capital obligation today could cost the state more than $10 billion in lost investment income over the next ten years, particularly when these funds fail to invest during a down market.
• Every pension solution presented to date by the Senate has been discussed behind closed doors with little to no stakeholder engagement. It is wrong to threaten future pension funding to extort current and retired teachers into accepting pension reform without stakeholder input.
• Refusing to fund the TRS Medical Insurance Fund will likely cost taxpayers an additional $1 billion in lost investment income over the next 10 years.
• In its proposed budget, the Senate has directed the TRS Medical Insurance Fund to pay the state’s portion of medical insurance for under-65 retirees. It also forces TRS to pay the state’s portion for the single coverage out of this medical insurance fund.
• If this effort is successful and this practice continues, retired teachers’ access to affordable healthcare will be in jeopardy.

Despite a call for these draconian changes to our retirement system, the Senate budget found a way to reduce the tax burden on the tobacco and vaping companies that the House proposed in its budget and it also found ways to fund other priorities and programs while leaving our current and retired teachers at risk – once again.

It is both fiscally and morally wrong to use TRS and livelihoods of thousands of retired teachers throughout the Commonwealth as a line of credit to fund other priorities or to shore up the state’s other, more poorly managed retirement systems.

The Senate’s proposed budget will cost Kentucky taxpayers billions of dollars in lost investment income in the future. Worse, instead of engaging stakeholders like TRS to arrive at a collaborative solution to this issue, our elected officials once again prefer to develop their own pension-reform measures, then extort our current and retired teachers to accept this reform by threatening to withhold funding the state is legally obligated to pay into our system.

It is vitally important that you call, tweet, or email your elected officials and tell them that the proposed Senate budget – which continues to ignore our state’s fiscal obligations and utilizes our retirement system as a line of credit to bailout and support other priorities — is not acceptable.

Tell your elected official to,

“fully fund the Commonwealth of Kentucky’s obligations to both the Kentucky Teachers Retirement System (TRS) and the TRS Medical Insurance Fund.”

Please contact your Representative
by calling 1-800-372-7181
or via email by clicking here

Stay safe and god bless all of you,

Tim Abrams
Executive Director
Kentucky Retired Teachers Association