Conway campaign releases memo detailing the cost of Bevin's policy agenda
09/25/2015 07:41 PM
The campaign of Democratic gubernatorial candidate Jack Conway released an in-depth policy take down of Republican opponent Matt Bevin’s plans for the state.
The memo, produced by Dana Mayton, the senior policy advisor for the Conway-Overly campaign — who until recently was the Senior Associate Vice President for Government Relations and Special Assistant to the President at the University of Louisville, the campaign focuses on the potential costs associated with policy initiatives Bevin has proposed on the campaign trail.
Teacher’s Retirement Plan
As part of the Conway policy memo, Mayton says Bevin’s plan to deal with the Kentucky Teachers’ Retirement System would cost hundreds of millions of dollars to state taxpayers — a figure confirmed to Pure Politics by KTRS.
During the Sept. 15 gubernatorial debate at Bellarmine University, Bevin called on state teachers to be placed back under Social Security under the federal government. KTRS is seeking $1.4 billion in next year’s two-year budget session to pay down their unfunded pension liability.
Without a plan in place to pay down the debt changing federal accounting standards with drop the agency’s funded ratio below 50 percent and unfunded liabilities will rise to $21.6 billion
Beau Barnes, KTRS deputy executive secretary and general counsel, told Pure Politics there are no benefits “for taxpayers, for the state as an employer or for teachers as beneficiaries” in moving teachers to Social Security.
KTRS has crunched the numbers and there are several big problems with pushing teachers back under Social Security.
First, Barnes said, the difference in benefits would be major. The employer cost for the Kentucky Teachers’ Retirement System is 6.57 percent of payroll; Social Security costs 6.2 percent of employee payroll — 37 cents less on every $100 dollars. But, Barnes said the difference in benefits is substantial.
The average KTRS benefit is $3,042 vs. $1,173 for the average Kentucky Social Security benefit, according to KTRS.
“That is a great bang for the Commonwealth’s buck (or, more precisely, the 3.7 cents extra for every $10 it pays a teacher),” Barnes said in an email. “Moreover, the KTRS pension is a better benefit for teachers by nearly three times.”
Barnes said that the move to Social Security would cost the state more money, to the tune of more than $600 million per year. The $600 million figure represents the “all in” costs and assumes that the employee and employer pay a portion into Social Security, and that the state “makes whole” teachers who end up on the losing end of the deal in benefits.
Furthermore, KTRS says putting teachers into Social Security does nothing to address the current $14 billion in unfunded liabilities owed to teachers.
On the side of other state employees under the Kentucky Retirement Systems plan, Kentucky Government Retirees co-founder Jim Carroll, said Bevin’s plan to change contribution plans for new retirees would increase “short term costs” to the pension system.
“The last thing this plan needs is increased short term costs,” Carroll said.
“It’s the exact wrong medicine for this illness.”
Carroll’s group will not be endorsing in the governor’s race.
Bevin has repeatedly targeted Common Core educational standards, known in the state as Kentucky Core Academic Standards, throughout his campaign, but Mayton said in her policy analysis that repealing the math and language arts teaching requirements could cost the state $35 million.
She cited a 2013 report by the Cincinnati Enquirer in which retired Education Commissioner Terry Holliday testified in a legislative committee hearing that developing new standards would cost at least $35 million.
Mayton also relied on other reports that crafting new education standards would cost Tennessee $4.1 million over a three-year period – a revelation that did not prevent the state from repealing Common Core in May – and undoing Common Core in New York could jeopardize $280 million in federal Race to the Top funding.
Still, states are taking a harder look at the standards.
Democratic New York Gov. Andrew Cuomo, for example, called the implementation of Common Core “deeply flawed” in his state in announcing a comprehensive review of the plan in New York earlier this month, according to a report by The Wall Street Journal. Cuomo reiterated his support for Common Core, and his office said he will push for legislation revamping the standards, according to the report.
Indiana became the first state to drop Common Core last year, but its newly crafted education standards largely mirror Common Core, according to a report by Education Week.
Mayton also cited an interview the Kentucky Chamber of Commerce conducted with Bevin in which he downplayed the estimated $35 million price tag’s impact on his proposal to end Common Core.
“The idea that $30 to $35 million is the rub is a false argument,” he said in the interview. “That’s not nothing – that’s real money, and that’s taxpayer money. The biggest cost is the cost on the teachers who have to go through yet one more change. That’s where I’m sensitive to this issue.”
The memo also says Bevin’s plan to shift operations from the state-based health exchange kynect to the federal exchange will cost more than $23 million.
Health officials have said shuttering kynect in favor of HealthCare.gov will cost those selling health plans higher fees. The state currently charges insurers a 1 percent fee to fund kynect, and Cabinet for Health and Family Services spokeswoman Jill Midkiff has said insurers would be assessed 3.5 percent on the federal exchange.
Mayton got the $23 million figure from another article by the Kentucky Chamber of Commerce, in which Carrie Bahanan, executive director of the Kentucky Health Benefit Exchange, said during a budget review committee meeting in August that creating a new information technology system to interact with the federal exchange would cost $23 million and take nine months to complete.
“Bevin’s ideas are not only reckless for hardworking families – they demonstrate a fundamental failure to understand the significance of his policy proposals that will impact every individual within our Commonwealth,” Mayton says in the memo. “Kentuckians already know that Bevin is an ‘East Coast Con Man’ who doesn’t tell the truth – but the price tag of his proposals is another reason we cannot trust him to serve as our governor.”
Reporting by anchor and managing editor Nick Storm and political reporter Kevin Wheatley.
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