Update From the End of Session

Greetings KRTA Members:

I hope you and your loved ones are staying safe during these unprecedented times.

The 2020 legislative session wrapped up this week with the General Assembly overriding all of Gov. Andy Beshear’s line-item vetoes, which resulted in the passing of a one-year budget (HB352). Coming into this legislative session, KRTA’s four main legislative priorities were:

Priority 1:
Fully fund the Teachers’ Retirement System (TRS) Medical Trust Fund in 2020 and 2021 as agreed upon in the Shared Responsibility Act passed in 2010.

• Result: Despite the Senate’s attempt to strip funding for the TRS Medical Trust Fund in 2020 and 2021, the one-year budget that passed provides full funding to the Medical Trust Fund for the next fiscal year.

Priority 2:
The General Assembly must fully fund its actuarial required contribution to TRS.

• Result: Despite the Senate’s attempt to hold TRS funding hostage, the one-year budget that was passed provides the state’s full actuarial required contribution for the next fiscal year.

Priority 3:
TRS must maintain its independence from Kentucky’s other retirement systems and the board composition and structure must not change.

• Result: TRS remains independent from Kentucky’s other retirement systems and the board composition and structure remains unchanged.

Priority 4:
The General Assembly must maintain the defined-benefit system for current and future retired teachers.

• Result: The Legislature made no changes to the defined-benefit system for both current and future retired teachers.

 

But we still have major concerns about the budget

While KTRA achieved all of its major priorities during the 2020 legislative session, major concerns remain that could put these objectives in jeopardy.

HB 352 created a budget reduction plan that would require reductions to pensions and insurance, that are considered excess funds, if a budget shortfall of 5 percent or less were to occur. This could well happen given the current economic situation. The budget language is not totally clear on how much money needs to be swept and how the funds are to be reallocated. At this point we expect this issue will be revisited next January or in a special session later this year.

Upon reaching his desk, Gov. Beshear vetoed these provisions and several other items. Unfortunately, House and Senate leadership voted to override all of these line-item vetoes collectively rather than on an individual basis. We feel confident if each line item been voted upon individually by the General Assembly, we would have had the votes in the Legislature needed to sustain the governor’s vetoes of these items important to KTRA.

What does all of this mean to you?

• In the short term, your pension and health-care benefits will remain stable and intact.
• As it stands right now, we can expect full funding of both the TRS Pension and Medical Insurance funds during the next fiscal year.
• Even if the budget reduction plan were implemented in the event of a shortfall, pension and healthcare benefits will remain intact. However, our pension and medical insurance fund are only funded 58 percent and 46 percent, respectively. This “borrowing” practice seems similar to to economic downturns of the early 2000s. If this borrowing practice returns now, the long-term stability of both of these funds are at risk, which will jeopardize future pension benefits and affordable access to healthcare for our retired teachers and place a huge burden on the taxpayers of Kentucky in the future.

Your voice matters!

During the 2020 legislative session, all of your calls, emails, and social-media messages made a difference and resulted in:

1. Full funding of both the TRS Pension and TRS Medical Insurance fund in the governor’s original proposed budget.
2. Full funding of TRS Pension and TRS Medical Insurance fund in the House’s revised budget.
3. Ensured that the Senate’s proposal to remove funding for the TRS Pension and TRS Medical Insurance fund was not included in the final budget that came out of the Conference Committee.
4. Prompted Gov. Beshear to issue a line-item veto of the provisions that allowed the General Assembly to reallocate funding from both TRS Pension and the TRS Medical fund in the event of a revenue shortfall, even though these vetoes were overturned by the Legislature.

These events and actions would have not happened without your activism and timely communication from many of our members and volunteers. Please don’t underestimate how much it matters when you make calls or send emails to your legislators when the need calls for it. I want to personally thank all of you for being so attentive and active during these challenging times.

Our fight continues

We expect that a special session will likely be called to address the potential revenue shortfall that is expected due to the economic slowdown caused by the pandemic. We will continue to closely monitor the situation in Frankfort and keep you apprised of any actions proposed or taken by the General Assembly. It is extremely important that all of you continue to follow these issues closely and be ready to engage with your elected officials when the time arises.

May you and your family continue to stay safe and healthy during these unprecedented times.

Sincerely,

Tim Abrams
Executive Director
Kentucky Retired Teachers Association