Nuance and politics reign in latest KTRS work group meeting
10/16/2015 08:06 PM
FRANKFORT — Members of the Kentucky Teachers’ Retirement System Funding Work Group met Friday to hear multiple options and delve into subtle tweaks to new teacher’s pension plans, and one major option for digging out of debt.
In a four-hour meeting in Frankfort the 23-member work group canvassed a multitude of options to reach 100 percent funding to the teachers’ retirement plan. The group talked about pension obligation bonding, tweaks to the amount of increased ARC funding from the General Assembly, benefit reductions for newly hired teachers and other options to dig out of the funding hole.
The group heard testimony from “Flick” Fornia with Pension Trustee Advisors, Inc. on how multi-layered changes in spending and benefit reductions could help the commonwealth meet a plan to pay down the compounding pension debt in the coming decades. However, all the scenarios rely on an influx of cash and the question remains where the state will get the money.
Several members of the panel asked Fornia for options for a dedicated funding stream. Fornia said he was “not optimistic” in finding a dedicated revenue stream not already discussed by the General Assembly, i.e. raising taxes, expanded gaming.
House Speaker Greg Stumbo, D-Prestonsburg, sought reassurance from Fornia that the “climate” was right for bonding with low interest rates. In the 2015 legislative session Stumbo proposed the issuance of $3.3 billion in pension obligation bonds, but was met with staunch opposition in the state Senate.
Passing bonding or structural changes to teacher’s benefits is going to be a tricky proposition in both chambers.
As the marathon meeting was nearing its end Sen. Damon Thayer, R-Georgetown, again reiterated the opposition to bonding in the Senate. To which Rep. Derrick Graham, D-Frankfort, retorted the House Democrats’ “reservations” on the structural changes on the “backs of teachers.”
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
The work group has two more meeting dates on their calendar. In the Nov. 6 meeting they will seek to form a draft report which will include components in a final recommendation to the legislature and new Governor and their final meeting on Nov. 20 they will seek to finalize their draft report.
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