Leaders voice 'troubling' concerns about pension bill

Published: Feb. 21, 2018 at 10:55 PM EST
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Since a pension reform bill

night in Frankfort, we have heard from Republicans who


Parts of the bill, though, are concerning for Democratic leaders.

House Minority Floor Leader Rocky Adkins, D-Sandy Hook, said Wednesday that he and others are still analyzing and looking through the nearly 300-page

, but that so far he is troubled by two aspects of the bill.

First is the cut to cost of living adjustments. Senate Bill 1 would halve them, from 1.5 percent to 0.75 percent.

"If a teacher retired at the age of 59, over the life span of living to mid-80s, that would cost that retired teacher over time somewhere in the neighborhood of 75-$80,000," Adkins said.

Second is the proposal to put new teachers in a hybrid cash balance plan instead of a traditional pension.

"We think that's troubling," Leader Adkins said. "To be able to attract the quality of teachers we want in the classroom, we've got to have a good defined-benefit plan, in our opinion."

The president of the Kentucky Education Association agreed that the change could hurt recruiting new teachers.

"We need to keep the focus not on the structure of our plans, which are not what the problem is," KEA President Stephanie Winkler told reporters Wednesday morning. "The problem is funding. We need to find revenue sources in this state to fund all of our vital public services, including public education."

Leader Adkins said he believed previous changes made to the state's pension programs in 2008 and 2013 are working and the returns are growing.

"We just believe that the reforms are working," he said. "We believe to have a strong pension system as we move forward is something that we have to attract the quality that we need in the classroom and the quality we need in public agencies."

Adkins said he does support fully funding the state's pension obligations, as the bill states.

Something Democratic leaders said the pension bill does not address: helping local governments handle rising pension costs.

The state pension board's new projections effectively upped the contribution rate for cities, counties and schools to pay into the retirement system for its employees, which leaves them on the hook for a steep increase, Leader Adkins said.

That is why he filed

, which would phase in that sudden increase over five years, allowing local governments and schools to better budget and prepare for the increased contributions to CERS, the County Employee Retirement System.

Currently, the contribution rate for CERS employers is about 19 percent of payroll for non-hazardous workers and 31.55 percent for hazardous, according to a release. Kentucky Retirement Systems said in Deember that the rates for the upcoming fiscal year would increase to 28 percent for non-hazardous and nearly 48 percent for hazardous, the release said.

"Each year, without fail, our local governments and schools have paid every required penny to our public retirement systems," Leader Adkins said in a release. "Now, they suddenly face a massive $317 million increase because of much more conservative projections that Kentucky Retirement Systems implemented last year. Those projections are not fair for CERS, which already has more than half of what it will need to pay down its 30-year liability. Such a drastic change with no time to realistically prepare for it would be devastating for local governments and schools alike, and it would all but force them to slash services, raise taxes or do a combination of both. It doesn't have to be that way."

The pension bill, Senate Bill 1, was referred on Wednesday to the Senate State and Local Government Committee. The committee is expected to hold a hearing on the bill next week.

You can read more about Senate Bill 1

, read the full bill itself

, and see more about what House and Senate GOP leaders say about the bill


Below is the full statement of KEA President Stephanie Winkler on Senate Bill 1.

"KEA appreciates the governor's continued commitment to fully fund the state pension systems as evidenced by his Executive Branch budget proposal. However, keeping promises made to state employees is only part of the equation; the legislature also has a responsibility to find new, fair and sustainable means to generate revenue to appropriately fund all of Kentucky's vital public services.

"After reviewing SB 1, we are encouraged that some provisions show that its sponsor heard the voices of thousands of public school employees, retirees and other stakeholders who attended public forums with their legislators last fall. However, many provisions still exist that violate the inviolable contract and increase the financial burden on local school districts and public school employees. Structural changes and cost-shifting the legislature's financial obligations to public employees and ultimately, to local taxpayers is not the answer to the funding problem that plagues the entire state budget.

"Kentucky's students deserve high quality teachers and support staff, and pensions that are reliable and well-funded keep current educators in the classroom and attract new employees to the profession. We are not convinced that SB1, in its current form, achieves those goals. But there is time remaining in the session to have meaningful conversations about what might work, and SB1 offers a good framework for those discussions. We look forward to working with legislators in both chambers on this important issue."