By Brenna R. Kelly
A working group appointed by Gov. Steve Beshear adopted a report Tuesday designed to help the Kentucky General Assembly fix the financially troubled Kentucky Teacher’s Retirement System.
The 23-member group of policy and education leaders met eight times over six months in hopes of finding a solution to shore up the pension plan that serves 70,000 active and 45,000 retired educators.
The group reviewed practices in other states, conducted a comprehensive review of funding options and worked with a pension fund expert, but after several meetings it became clear that the group was not going to settle on one recommendation, Chairman David Karem said at the meeting.
The group’s report offers broad recommendations on how the plan can make up the shortfall and be reformed to keep it solvent. The options include phasing in full funding of the plan, restructuring benefits, closing the plan to new hires and creating a 401(k)-style plan among others.
The group’s mission became to “provide as much thoughtful background information as we possibly could to the 138 members of the general assembly so that they could weigh and see the repercussions of all the different options,” said Karem, who serves on the Kentucky Board of Education.
David Adkisson, president and CEO of the Kentucky Chamber of Commerce, said the report should serve as a “shopping list of options” for the 2016 general assembly.
“I hoped that we could come with a package with a nice little bow on top that we would hand to the legislature and they would enact it the first week or two in January,” Adkisson said.
But the report will be invaluable to legislators and others studying the issue, he said. Adkisson also noted that the working group’s members won’t stop advocating for a fix even though their work is complete.
“Obviously, there are people here on this panel who care very deeply about this and won’t be satisfied to say, ‘Good luck legislature,’” Adkisson said. “I think there are some of us who would be more than willing to move the ball and build some consensus going forward.”
Beshear appointed the group in June to study how to fix the pension system, which has a $14 billion unfunded liability and a 53.6 percent funding status, according to the system’s 2014 actuarial valuation. That’s compared with the system’s $571 million unfunded liability and 95.7 percent funding status in 2000.
In addition to Karem, Kentucky Board of Education Chairman Roger Marcum and Kentucky Department of Education Associated Commissioner Amanda Ellis were part of the working group.
Beshear thanked the group for its work in a statement issued after the meeting and urged governor-elect Matt Bevin and the general assembly to use the report to make ensure KTRS’ future.
“After all, these teachers are the foundation of our educational system and we entrust the future of the Commonwealth in their hands each day as they educate our children and grandchildren,” Beshear said. “When those teachers have concluded their careers and retired, we must ensure that the Kentucky Teachers’ Retirement System is able to fully honor our commitments to them.”
The group’s work will be housed on group member and auditor-elect Mike Harmon’s website. KTRS also plans to archive the information.
“All of the information that has been provided to us will be very helpful in our efforts to educate teachers about KTRS, and to legislators and Legislative Research Commission staff and other advocacy groups,” said Mary Ann Blankenship, executive director of the Kentucky Education Association.