Pensions for workers, teachers taking different routes this session with varied chances of success
02/23/2015 03:44 PM
FRANKFORT — As one Kentucky pension system crosses its fingers for a 30-year, $3.3 billion bond proposal to shore up its funding, another retirement agency is preparing for a bevy of changes that could come during this year’s legislative session.
The Public Pension Oversight Board heard brief updates on 16 pieces of legislation Monday that would tweak certain practices at the Kentucky Retirement Systems, attempt to locate additional funding for the beleaguered plan for most state workers, allow an exit strategy for agencies looking to leave the system and more. Some bills have cleared their respective chambers while others have not yet been heard in committee.
But a much more substantial proposal, in which the state would pump $3.3 billion through bond sales into the Kentucky Teachers’ Retirement System to put it on solid financial footing, remains to be called for a floor vote in the Democrat-led House. KTRS officials have said the system’s 51 percent funded ratio will be jeopardized and the state will eventually owe more in pension contributions without the influx of billions.
House Bill 4, the KTRS bonding proposal sponsored by House Speaker Greg Stumbo that cleared the House Appropriations and Revenue Committee without opposition earlier this month, had been slated for a vote last week, but leadership’s decision to cancel the chamber’s legislative activity in the wake of a winter storm delayed that consideration.
Rep. Brent Yonts, a co-chairman of the pension oversight board, defended the plan despite GOP misgivings. Stumbo, D-Prestonsburg, has cited low interest rates and KTRS’s performance on the stock market in pushing for the bonds, and he said the chamber will vote on HB 4 later Monday.
“Obviously if the economy goes flat busted there may be some waves there, but on paper it works,” Yonts, D-Greenville, said of HB 4 in an interview with Pure Politics. “… Bond rates now are the cheapest they’ve ever been versus money you’re borrowing otherwise, so now’s the time to borrow and think big and solve that problem.”
Republicans, too, seem ready for a vote on the legislation.
GOP Reps. Brad Montell of Shelbyville and Addia Wuchner of Florence have filed four floor amendments to the bill, which would either ratchet the bonding authorized in HB 4 down to $520 million or handle the issue through direct appropriations rather than bond sales.
Senate Republican leaders have expressed concerns with Stumbo’s plan, and the Senate Appropriations and Revenue Committee on Thursday unanimously passed Senate Bill 94, which would cap general fund-backed debt at 6 percent and direct debt service savings to a fund for the troubled pension plan for most state workers that has less than a quarter of the money needed to cover current and future retirement obligations.
Sen. Joe Bowen, sponsor of SB 94 and a co-chairman of the Public Pension Oversight Board, said his bill and HB 4 are “totally different” conceptually.
“If that proposal were to make it through, it’d blow mine out of the water because we certainly wouldn’t be able to work under those confines of a 6 percent debt ceiling,” Bowen, R-Owensboro, told reporters after the meeting.
But Yonts argued that HB 4 and SB 94 could coexist, depending on how one interprets the financing plan proposed for KTRS.
“Is that an additional percentage of debt or not? It is not,” he said, noting the bonds would be paid with money already budgeted to KTRS. “It is an existing debt in statutory form that must be paid being transferred into a bonded debt. It’s a mortgage payment. It’s all a mortgage payment. We have to do it. If we can save the system, we ought to do it.”
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