Time is Now for Serious Look at Reforms for Teachers' Pension System
OP-ED By House Republican Floor Leader Jeff Hoover
FRANKFORT, Ky. (July 9, 2014) - Over the course of the past decade, the issue of state pensions has come to the forefront, as the gap in promised benefits and the financial resources set aside to fund them has continuously expanded. Many states, including Kentucky, have required action on this issue before the system completely collapsed.
I am proud the 2013 General Assembly took the bold steps of increasing our financial contribution and revising benefits for new employees in an effort to preserve the system.
However, an important segment of the pension issue was left unchanged. The Kentucky Teachers' Retirement System (KTRS) continues to operate as it did prior to 2013, yet the data demonstrates that there is cause for concern with this system that needs to be addressed before it collapses.
The Comprehensive Annual Financial Report issued by KTRS this past December shows the system had approximately 75,000 active and 47,000 retired members. The report states the funding level this past year was 51.9%, with $13.85 billion in unfunded liabilities. According to data released by the Kentucky Chamber of Commerce this past week, a key reason for this underfunding is actual employer contributions to the system have been significantly less than the amount required to sustain financial obligations.
Put simply, unless the situation is rectified in the immediate future, the system will be depleted of financial resources and be unable to meet the obligations we have to our retired teachers and administration.
This past January, the Kentucky Chamber of Commerce publicly called on the General Assembly to undertake a bipartisan review of KTRS to recommend a sustainable path forward to ensure financial stability. Understanding the need to stabilize this important component of our pension system, I introduced House Concurrent Resolution 179. This resolution would have established the Kentucky Teachers' Retirement System Task Force, which would have been charged with developing consensus recommendations concerning the benefits, investments and funding of KTRS. A report would have been required by December 1, 2014, giving ample time for it to be addressed by the 2015 General Assembly.
Unfortunately, as has been all too common with issues of importance, Speaker Greg Stumbo and the other members of House Democrat Leadership would not even allow a hearing on this legislation, much less a vote. Much like comprehensive tax reform, the expansion of broadband services and public-private partnership legislation, this issue died as the General Assembly shirked our responsibility to address these timely and crucial issues. It is just one more example as to why there needs to be a change of leadership in the Kentucky House of Representatives.