A plan to decrease the unfunded liability of the Kentucky Teachers Retirement System needs time to work, a lawmaker said last week.
Meanwhile, a dialogue has begun about how to address the shortfall in the Kentucky Retirement System. The KRS issue is expected to be a major one for the General Assembly.
“It hasn’t had time to kick in,” state Rep. Jody Richards, D-Bowling Green, said of the KTRS plan put in place a couple of years ago that’s called “shared responsibility.”
The KTRS, as of a Dec. 28 report by Gary L. Harbin, executive secretary of the KTRS, has assets of $14.7 billion and liabilities of $27 billion, an actuarial valuation for the period ending June 30 shows. That’s an unfunded liability of $12.3 billion.
Richards said the KTRS plan prefunding retired teacher health care in a six-year program – which just completed its second year – has made progress and now needs time to work.
The measures in place lopped off $3.1 billion in actuarial liability. Another $1.9 billion in savings in actuarial liability resulted through management of health care costs – the bottom line result is that more than $5 billion in actuarial accrued liability “has been eliminated from the KTRS Medical Insurance Fund,” Harbin’s report noted.
David Baird, associate executive director of the Kentucky School Boards Association, told the board meeting of the Green River Regional Educational Cooperative last week in Bowling Green that $300 million a year for 30 years is needed from the legislature in contributions to KTRS to deal with the unfunded liability.
Superintendents of the more than 30 school districts that are members of the cooperative make up the board of directors. Baird said each year that the KTRS contribution is put off by lawmakers, the price tag increases $25 million to $30 million.
The Pew Center for the States website noted that the KTRS unfunded liability is about half of Kentucky’s total $23.6 billion shortfall. KRS alone lacks about $18 billion.
“Every year we delay gets us deeper in the hole,” Baird told the GRREC board.
According to the Pew Center site, Kentucky’s state employee pensions are funded at a less than 60 percent rate, and the industry standard should be at least 80 percent. Pew reports that in 2010, only Wisconsin was able to fund its pension at a 100 percent level and 34 other states were below 80 percent.
Patrice McCrary, president of the Warren County Education Association, and Wanda Faulkner, president of the Bowling Green Education Association, agreed that the classified employees in their organizations – bus drivers, cooks, instructional aides – are affected by whatever is done to the KRS.
“It’s scary,” Faulkner said. “These are people who worked for years. They are now planning for their retirements.”
McCrary said a news conference by the Kentucky Public Pension Coalition is set for Thursday in Frankfort at the state Capitol Rotunda to focus on the KRS debate. KRS provides retirement for all state employees not in the KTRS.