While we applaud Frankfort for recognizing that switching to a defined contribution plan would be disastrous for both retired teachers and Kentucky taxpayers, we still are extremely concerned about certain provisions in SB1 that essentially shore up the pension fund on the backs of our current and retired teachers. This is especially disappointing in light of the fact that Frankfort has repeatedly ignored its fiduciary responsibility to properly fund our pension system since 2003.
Under SB1, Frankfort is proposing a 12-year COLA reduction that is illegal and violates the inviable contract. Under this proposed reduction, a 59-year-old retired teacher who draws an average pension would stand to lose approximately $73,000 of earned benefits during his/her lifetime.
The bill also does not address the state’s reduction of its healthcare funding allocation, as mandated in the shared-responsibility reform legislation passed in 2010. Furthermore, it appears that this proposed legislation could end protections guaranteed under our inviolable contract, which could allow future administrations to raid our contractually earned benefits.
We reserve final judgment on SB1 until we have time to carefully review the full bill and examine its actuarial soundness. We are very disappointed that Frankfort continues to push for our members to bail them out of their fiduciary obligation to fund the pension system without even considering either tax reform or new revenue generation as an alternative to these draconian measures.