by Tom Loftus
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FRANKFORT, Kentucky – Many retired teachers would pay thousands of dollars per year more for health insurance under Gov. Matt Bevin’s proposed 2018-20 state budget, say advocates for retired teachers.
While Bevin’s proposed budget fully funds pension benefits for teachers for the next two years, it provides no state dollars for retired teacher health insurance.
This budget cut would hit teachers who have retired since July 1, 2010, and are not yet 65 – when teachers qualify for Medicare coverage.
“In 2010 we passed a ‘shared responsibility’ plan that required all of us to share a part of retiree health care so that this would never have to have this happen again,” said Stephanie Winkler, president of the Kentucky Education Association. “…Now this proposed budget would strip away the state funding and it means that anyone who retired after 2010 could potentially have to pay all of their health insurance costs.”
Tim Abrams, executive director of the Kentucky Retired Teachers Association said in a news release on Monday that the proposed cut would be “devastating for a retired teacher on a fixed income … putting the financial livelihood of thousands of retired teachers in real jeopardy if this budget is enacted.”
Abrams said under the proposal “a single teacher drawing a pension of $3,000 a month could pay up to an additional $500 a month for health insurance, which adds up to $6,000 per year.” Affected retired teachers under a “parent plus” plan would pay $800 a month more, or $9,600 a year, Abrams said.
The Kentucky Teachers’ Retirement System had requested $145.5 million in state funding for retiree health insurance under the law passed in 2010 under which teachers, retired teachers, local school districts and the state all agreed to contribute to a plan to restore financial stability to the retired teachers’ health insurance fund.
Lawmakers on the state’s Public Pension Oversight Board said Monday that this proposed cut has stirred a flurry of complaints in the week since the governor unveiled his proposed spending plan.
Sen. Joe Bowen, the Owensboro Republican who co-chairs the pension oversight board, said he has been surprised by the objections because Bevin’s budget fully funds teacher pension benefits.
And Bowen emphasized that retired teacher health benefits have never been part of what is known as the “inviolable contract” – a bedrock principle in state pension law that protects pension benefits given a public employee at the time they were hired. Bowen complained that the Kentucky Teachers’ Retirement System has not done enough to make that point clear to its members.
But Rep. James Kay, a Versailles Democrat, told Bowen that the reason for the complaints is obvious: “Teachers are not going to be happy when you don’t fund their health insurance.”
Kay asked Bevin Budget Director John Chilton, who is also a member of the pension oversight board, why the teacher retiree health benefit was not funded. Chilton said that “there was just not enough funding” available to pay for all needs and requests, and he noted that funding for the retiree health benefit was not required by the “inviolable contract.”
After Monday’s meeting, Bowen said he personally has not yet decided on whether funding for teacher retiree health benefits ought to be restored to the budget by lawmakers as they revise the Bevin plan in the next two months.
“The budget the governor rolled out in his budget address the other night was the first step in this process. So if you’re asking if there’s a chance that that will be restored I would have to say, yeah, there is a chance,” Bowen said. “That will be part of crunching all the numbers. And I’m not going to take a position on that today.”
Winkler said, “We’re glad they’ve fully funded pensions. … We’re happy about that. What we’re not happy about is doing it on the backs of this budget item and so many other education programs in this budget.”
Like so many others who are complaining about the deep cuts in Bevin’s proposed budget, Winkler and Abrams each said Monday that the solution is for the General Assembly to pass tax reforms or other new sources of revenue to restore funding for worthy programs.
Bevin emphasized in his budget address that tax reform remains a top priority once the legislature gets moving on a pension reform bill and the state budget bill. Bevin said if lawmakers do not have time to tackle tax reform during this session, he plans to propose tax reform at a special legislative session later this year.
Tom Loftus can be reached at tloftus@courier-journal.com.