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Tim Abrams: Senate budget withholds required funds to the teachers retirement fund and that must stop

As the Kentucky General Assembly debates the budget and its potential impact on teachers and retired teachers, it is ironic that 10 years ago lawmakers adopted the Shared Responsibility Act of 2010, a model of legislative collaboration, compromise and good governance.

In 2010, Kentucky taxpayers faced a $5 billion liability for medical benefits owed to retired teachers. Legislative leaders convened active teachers, retired teachers, and the public-education community to find a solution that preserved affordable access to healthcare for retired teachers while eliminating the $5 billion hole.

These stakeholders agreed on a solution, the Shared Responsibility Act of 2010. This plan allowed healthcare for retired teachers to be prefunded by requiring everyone involved – active teachers, retired teachers, school districts, and the state – to contribute into a newly established medical insurance fund managed by the Kentucky Teachers’ Retirement System (TRS). This law passed unanimously and remains a model of effective collaboration and problem-solving.

Tim Abrams

Now, in the midst of an unprecedented global pandemic, the Senate approved a budget last week that completely ignores its statutory obligation to the TRS medical insurance fund. Instead, the Senate, through its budget legislation, instructed TRS to pay the state’s portion from monies in the existing fund – essentially the very same “kick-the-can-down-the-road” practice that put Kentucky’s pension systems in trouble in the first place.

While the medical insurance account for our state legislators is over-funded at a whopping 255 percent, the TRS medical insurance account for retired teachers is funded at only 46 percent. The proposed budget passed by the Senate will only worsen this number.

Even more disheartening, the Senate has now proposed a budget that essentially withholds $1.1 billion of actuarially required funding to the TRS retirement fund unless the General Assembly enacts pension reform by Aug.1 There is simply not enough time to properly do this in the waning days of this legislative session.

Not only is this mandate morally inconsistent with Kentucky values, it could cost taxpayers an additional $1.1 billion in lost investment income in this retirement fund over the next decade.

Ever since former Gov. Matt Bevin announced his pension-reform plan, the General Assembly has not engaged stakeholders affected by this reform to work on a long-term pension solution, like it did in 2010 with the Shared Responsibility Act.

Instead, all negotiations have taken place behind closed doors with little to no stakeholder input. Instead of engagement, the Senate has used extortion tactics and legislative tricks, such as hiding reform in sewer bills and placing Draconian measures in its budget bills.

During this legislative session, the General Assembly has leveraged the COVID-19 crisis to essentially eliminate input from lobbyists, stakeholders, and citizens by preventing them from entering the Capitol and engaging in the legislative process. As a result, the Senate created and enacted its budget with virtually no input from the public and even failed to post a copy of the spending plan or make it available for review by the general public.

As a Commonwealth, we must stop using the money allocated for teachers’ healthcare and pensions as a line of credit to use for other legislative spending. The General Assembly needs to stop extorting teachers to either “buy-in” to its pension reform or else “face the consequences” of underfunding. Our state legislature must live up to its prior commitments to our education community by properly funding both the TRS pension fund and medical insurance fund.

As we move forward, all political parties, interested groups, and the entire educational community must come together with the legislature — as we did in 2010 — to negotiate a long-term legislative solution that provides meaningful reform without jeopardizing the retirements and livelihoods of thousands of current and future retired teachers.

Tim Abrams is the executive director of the Kentucky Retired Teachers Association.

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One Comment

  1. Sarah Longsworth says:

    Dear Tim,
    You are mistaken, it must continue. I one of thousands of small business owners who is on the absolute verge of bankruptcy regardless of any relief loans from the government which I will be lucky a see a dollar of in the next 6 months, my IRA just lost 30% of its value in a matter of weeks, and my health insurance premiums practically tripled over the last 5 years, all the while most all of my profits are foregone to pay overhead including a a copious amount of state taxes. I just laid off my last employee today who is now going to struggle to feed her family and afford to stay living where they’re at. I am one of thousands upon thousands.
    Teachers and public employees on the other hand…. Not a single one is going to get laid off because of this, not a single one is going to get a reduction in pay, not a single one is going to lose their (extremely low cost) health insurance, not a single one is wondering if they’re going to be able to find a meaningful salary and job in the coming years, not a single one as of today just had half of their retirement wiped out, not a single teacher is going to have to work until their 75 years old to be able to afford basic goods.
    I and the thousands upon thousands of other private sector employees pay taxes year after year, making a tiny bit of money in the good years, only to be thrown in a ditch in times like this. Without us and our taxes your system is nothing. And the time is upon us that we’ve had enough.
    And you have the audacity to say those that have zero risk or impact during years long economic turmoil should being given more “free” guaranteed handouts. Taxes should be slashed for the next 5 years right now. How about the public employees that I keep employed through my taxes take a hit in their pockets? They’re not going to see their full pension payout anyways. teachers are too brainwashed to understand that tough luck will eventually hit their pension. They live in lala land with people like you telling them they will get it no matter what.
    Then again you’re simply making a 6 figure salary convincing all of the poor teachers they’re actually going to see a 100% pension payout at the end of their careers, so you’re not going to change a step.
    The clown show is over. We are wide awake and are not longer going to stand for paying taxes, working like dogs and being poor so that public employees can have guaranteed everything and retire when they’re 49. Get ready for the Tea Party 2.0 just like during the ’08 ’09 economic meltdown.

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