Dec. 3, 2020
LOUISVILLE – The Kentucky Retired Teachers Association (KRTA) has released its legislative priorities for the 2021 Kentucky General Assembly regular session that begins the first week of January.
“Our priorities have not changed from last year,” said KRTA Executive Director Tim Abrams. “Because of the COVID-19 pandemic possibly restricting access to the State Capitol and Capitol Annex and because the General Assembly will be working on the second year of the state’s two-year budget, it will be a very unique session. But we want to make sure that our priorities are well-known among the legislature and our members.”
The KRTA’s legislative priorities are:
- Fully fund the actuarial required contribution Teachers’ Retirement System (TRS)
- Fully fund TRS Medical Insurance Fund as agreed to in the Shared Responsibility Agreementpassed by the legislature in 2010.
- No changes to the structure of the TRS board of trustees
- Maintain a defined-benefit system for current and future retired teachers
Following are details on the KRTA legislative priorities.
Fully fund the actuarial required contribution for TRS
“The first priority is to get full funding for TRS,” Abrams said.
In 2007, TRS was almost fully funded. However, missed actuarial assumptions due to an unprecedented financial crisis, the Great Recession – combined with the failure of the General Assembly to fully fund its contribution as required by law – resulted in the deterioration of TRS’ financial stability. Today, because of this oversight, TRS is only 58-percent funded, with an unfunded liability of roughly $15 billion dollars.
If legislators properly and routinely make the actuarial contribution to TRS as required by law, the solvency of the retirement system will improve and eventually be fully funded. The TRS actuary has stated that as long as full funding continues, retired teachers will receive the benefits they were promised.
Properly funding the state’s Medical Insurance Fund as agreed to in the Shared Responsibility Agreement passed by the legislature in 2010.
In 2010, Teachers, School Districts, and the Kentucky General Assembly came together to help pay for rising health care costs by passing the Shared Responsibility solution in House Bill 540.
The agreement is working and has nearly alleviated the Kentucky Taxpayer’s burden to provide health care to retired teachers while providing for an age group that is most vulnerable to COVID-19.
But the legislature’s failure to pay its portion under the 2010 Shared Responsibility Agreement would begin to erode the stability of the medical insurance fund at TRS during these unprecedented times.
No changes to the structure of the TRS Board of Trustees
Since TRS is independently managed, the fiduciary responsibility of the retirement system remains exclusively accountable to the system’s members.
TRS is administered by an 11-member Board of Trustees, of which seven are elected by TRS members. The Kentucky Education Commissioner and State Treasurer serve as board members, and the governor appoints two members who must have investment experience.
Abrams pointed out that both the TRS pension fund and Medical Insurance Fund have realized revenue gains due to a 30-year return-on-investment of 8.39 percent.
“That comes as a result of the strong board of trustees at TRS,” he said. “Why would we want to change something that works? Because of those numbers, TRS ranks in the top five percent of all pension funds across the country.”
Maintain a defined-benefit system for current and future retired teachers
Kentucky teachers, by law, are not eligible to receive Social Security benefits, either personally or from their spouses. A state pension is the only retirement vehicle Kentucky teachers have in retirement.
Defined-benefit retirement plans are the most effective and efficient way for taxpayers to fund the retirement benefits for public school teachers.
“KRTA and other education groups have been at the table during talks in Frankfort about possible pension reform,” Abrams said. “And we want to make sure that if our legislature makes any major changes that it protects the solvency of TRS and allows our colleagues who are still in the profession to attract quality educators to public school classrooms.”
The 30-day 2021 General Assembly Regular Legislative Session is scheduled to begin Jan. 5 and end March 30.
More information on the KRTA legislative agenda is available on the Teach Frankfort to Pay Their Debts website.