In search of $400 million, Ky. teachers retirement fund will take forests in lieu of cash
10/15/2013 12:04 PM
Barely half-funded, the Kentucky Teachers Retirement System will ask state legislators for about $400 million in each of the next two years to put the system on solid financial ground.
But that’s more than what Kentucky spends on its entire court system — $315 million — and 19 times what the commonwealth spends on its economic development cabinet — $21. 5 million. It also would take up nearly all of what the state brings in through the motor vehicle usage tax, which is $421 million.
Gary Harbin, executive director of the $16.6 billion teachers retirement system, said the teachers retirement system is recommending a combination of ways for lawmakers to come up with that budget request, including floating bonds considering the relative low rates. (Find out how he answers skeptics who say Kentucky already has put too much in the way of courthouse construction and other programs on the state’s credit card at 6:00 of the interview).
Later, he said the system also would accept donated assets from the state (10:00 of the interview) and used the example of timberland.
“I don’t know if the state has any underutilized assets, acreage around — 50,000 acres is worth about $50 million to $75 million, so we could add that to our portfolio and that could be part of the state’s contribution,” he said.
While the teachers retirement fund isn’t in as precarious of a financial position as the Kentucky Retirement System for state and city employees and the state police, it is less than 55 percent funded. That’s the amount of assets it has to cover all the retirement benefits and health coverage it would owe. The interview begins with how this fund got to that point even as teachers and the state made an agreement in 2010 to pay more for health coverage to avoid catastrophe:
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