DECEMBER 3, 2015
After five months of review…
By Mike Wynn
After five months of review, a state work group finalized options Tuesday to better fund and reform Kentucky’s pension system for teachers, but stopped short of issuing any major recommendations for the state legislature to consider in 2016.
Gov. Steve Beshear created the 25-member panel in June to recommend solutions for Kentucky Teachers’ Retirement System, which faces a $14 billion shortfall and needs around $510 million in additional money next year.
Panel members, however, have struggled to find common ground and opted Tuesday to advance a broad series of scenarios instead of specific recommendations. Those include a phase-in plan to fully fund retirement contributions over several years. The report also notes options to rework some of the benefit calculations for both current teachers and future hires.
“They are pretty general findings that, quite frankly, everybody pretty much knew,” said Democratic House Speaker Greg Stumbo, who equated the report to “rabbit stew” without a rabbit.
Stumbo is pushing to shore up the system with pension bonds and criticized the lack of concrete plans for a large infusion of money.
“I don’t think that what this group is going to recommend is going to be something that the General Assembly can use as a road map to go forward,” he said.
Others were more optimistic that the group’s work will at least provide research and analysis for legislation next year.
Republican Sen. Joe Bowen, chairman of the Senate State and Local Government Committee, said that while panel members have different notions about what the report says, he expects it will eventually lead to a plan that is fair to both teachers and taxpayers.
“What this exercise has done more than anything else is made us be more aware and get better educated on the whole topic,” he said. “We got facts out there so now we are going to have to build something off the facts we have.”
Beshear also said in a statement that he was pleased with the dialogue, and he urged lawmakers to rely on the report for reforms next year.
Gov.-elect Matt Bevin is expected to push for an overhaul of public pensions next year that would move future hires into a “defined contribution” plan similar to the 401(k)-style plans used in the private sector.
Bowen said Tuesday that many in the GOP Senate would likely support the change, but “what we do will be independent of what the governor will do. Each of us has our own approach to this.”
Stumbo, meanwhile, said he plans to refile a bill that would provide up to $3.3 billion in pension bonds – a measure that died in the 2015 legislative session. Stumbo called it the “only plan out there.”