Quantcast

KEA Responds To Pension Reform - LEX18.com | Continuous News and StormTracker Weather

KEA Responds To Pension Reform

Posted: Updated:

(LEX 18) - The Kentucky Educator's Association responded to a press conference held by state legislatures. 

Here is their statement:

This morning, legislative leadership held a press conference in order to “clear up some misinformation” about the Teachers’ Retirement System of Kentucky (“TRS”).   In doing so, they relied on a document that allegedly shows that only 10% of the unfunded liability is due to legislative underfunding of the system.  KEA has a different point of view on that issue.  Here are the most important points to remember about TRS and funding:

  • The data included in the memo was based on information provided by TRS in response to a very specific, limited legislative request about the system for the period from 2007 to 2013.  That six-year time frame included the period of the greatest economic downturn in U.S. history, other than the Great Depression.  Any entity – not just the public pension systems – judged by economic data from that period of time will be found wanting.  Because it is a very large pension system, TRS is a long-term investor.  As with any long-term investor, financial success or failure of the system is appropriately measured by a much longer period of time, at least 20 to 30 years.

  • The obligation to pay retiree benefits and make good the unfunded liability for TRS and all the other public pension systems ultimately falls on the Commonwealth.  For TRS, the law requires the legislature to make its statutory contribution each year; that “employer” contribution is a fixed percent of payroll.  However, that’s not where their legal obligation ends.  KRS 161.550 requires a two-pronged funding approach: the last paragraph of the statute requires the legislature to “look back” at the end of each biennium and fund the difference between the percent of payroll and the amount necessary to fully fund retirement allowances. That difference is essentially the actuarially required contribution (“ARC”) for the system.   The second part of that obligation is what the state failed to fund for an extended period beginning in 2008 and continuing through 2015. 

  • TRS requested, and received, additional ARC funding during the 2006-08 biennium.  However, beginning with the 2008-10 biennium and continuing through 2014-16, the additional funding was requested but was not provided.  Every budget request from TRS during that time included a request for the necessary additional ARC funding. 

  • TRS budget requests are sent directly to the legislature and the governor.  Any suggestion that the legislature did not know that additional funding was needed or that funding was consistently requested is simply incorrect.

  • In addition to the written budget requests, TRS also sent letters to the governor and legislature reiterating the need for additional funding for the system.  TRS representatives provided requested data, appeared at countless committee meetings and talked directly with the administration and with individual legislators about the need for additional funding, all to no end.  In addition to the budget requests and the letters, the legislature receives copies of the Annual Actuarial Valuation report that outlines the money needed to fully fund the system.

  • Although the legislature now claims they are not responsible for the “lookback” funding, they repeatedly used their “notwithstanding” language in budget bills to avoid that statutory obligation.  If they truly believed they did not have a legal obligation to provide that second prong of funding, it would never have been necessary to “notwithstand” the obligation in the budget documents.

  • Had the full actuarially required contributions been made as requested, TRS would now be 66.5% funded, and would hold an additional $3.8 billion in assets.

  • Since 2013, the stock market has rebounded strongly, and TRS has never had more assets under management than it does today.  Even during the downturn, TRS consistently outperformed other similarly sized pension systems because it managed risk and did not hold questionable investments.

  • Defined benefit pension plans like TRS work well when they are properly funded.  Teachers have always made their own legally-required contributions in full because they have to.  Although the legislature has met its minimum salary-based obligation to TRS, it has consistently avoided dealing with the ever-mounting unfunded liability, even going so far as to relieve itself of its own legal obligations in order to avoid that responsibility.

Although it’s a convenient argument to make now, TRS management and investment returns are not the issue. The retirement system has never missed a payment to a teacher in its 76 year history. KEA has full faith in the leadership of TRS and in the viability of the system.

KEA applauds Governor Bevin and legislative leadership for funding 94% of the additional ARC funding requested during the 2016-18 biennium. TRS and its participants are grateful to the administration and legislature for turning its attention, appropriately, to providing most of the necessary funding for the system during that budget period.  Continued funding at required statutory levels for all public pension systems by current and future General Assemblies is absolutely necessary to assure the retirement security of teachers and school employees across Kentucky.

  • Most Popular StoriesMost Popular StoriesMore>>

  • UPDATE: Neighbor Charged After 1 Killed, 1 Wounded In Montgomery Co.

    UPDATE: Neighbor Charged After 1 Killed, 1 Wounded In Montgomery Co.

    Sunday, May 27 2018 9:54 AM EDT2018-05-27 13:54:00 GMT

    MONTGOMERY COUNTY, Ky. (LEX 18) — Police have arrested a woman who they say shot two of her neighbors Saturday night, killing one of them. The Montgomery County Sheriff's Department arrested 51-year-old Francis Zaayer of Mount Sterling just after midnight Sunday morning.

    MONTGOMERY COUNTY, Ky. (LEX 18) — Police have arrested a woman who they say shot two of her neighbors Saturday night, killing one of them. The Montgomery County Sheriff's Department arrested 51-year-old Francis Zaayer of Mount Sterling just after midnight Sunday morning.

  • Northern Kentucky Valedictorian Denied Right To Speak At Graduation

    Northern Kentucky Valedictorian Denied Right To Speak At Graduation

    Saturday, May 26 2018 3:34 PM EDT2018-05-26 19:34:43 GMT
    WLWTWLWT
    WLWTWLWT
    CRESTVIEW HILLS, Ky.  (WLWT) - Christian Bales, a star student at Holy Cross High School, was denied the honor to give his valedictorian speech at Friday's graduation. The Diocese of Covington made the ruling 10 hours prior to the graduation ceremony leaving many to speculate why. Here's what happened, according to Director of Communications Tim Fitzgerald: "School officials and representatives of the Diocese of Covington reserve the right to review and approve all st...
    CRESTVIEW HILLS, Ky.  (WLWT) - Christian Bales, a star student at Holy Cross High School, was denied the honor to give his valedictorian speech at Friday's graduation. The Diocese of Covington made the ruling 10 hours prior to the graduation ceremony leaving many to speculate why. Here's what happened, according to Director of Communications Tim Fitzgerald: "School officials and representatives of the Diocese of Covington reserve the right to review and approve all st...
  • Worker Breaks Down Describing Deadly Restaurant Crash In 911 Call

    Worker Breaks Down Describing Deadly Restaurant Crash In 911 Call

    Saturday, May 26 2018 4:23 PM EDT2018-05-26 20:23:44 GMT
    CNNCNN

    BESSEMER CITY, N.C. (AP) - A worker at a North Carolina restaurant where a man drove through the front wall, killing two family members, broke down when she recognized the driver.      In a 911 call released Thursday, the Surf and Turf Lodge worker says she knows Roger Self and thinks he drove into the building on purpose Sunday.      Then as she realizes members of his family are badly hurt, she breaks down.      The worker told the 911 op...

    BESSEMER CITY, N.C. (AP) - A worker at a North Carolina restaurant where a man drove through the front wall, killing two family members, broke down when she recognized the driver.      In a 911 call released Thursday, the Surf and Turf Lodge worker says she knows Roger Self and thinks he drove into the building on purpose Sunday.      Then as she realizes members of his family are badly hurt, she breaks down.      The worker told the 911 op...

Powered by Frankly

© LEX18.com 2018, LEX18.com
A CORDILLERA COMMUNICATIONS Station
All rights reserved
Privacy Policy, | Terms of Service, and Ad Choices

Can't find something?