FRANKFORT — The Senate has scrapped language in a House bill calling for $3.3 billion in bonds to bail out the ailing Kentucky Teachers' Retirement System. In its place, the Senate proposes a task force that would study teacher pensions this year and then report back to the legislature on possible funding solutions.
"We need to make sure we know what we don't know," said Senate President Robert Stivers, R-Manchester, who offered the substitute language Monday to the Senate State and Local Government Committee.
Currently, KTRS has only 53 percent of the assets it's expected to need for future payments — or 45 percent under new federal accounting rules, if no viable funding source is put in place this year. KTRS officials say the state stopped making its full recommended contributions in 2008, leading to annual shortfalls of several hundred million dollars.
House Bill 4, sponsored by House Speaker Greg Stumbo, would authorize $3.3 billion in bonded debt so the state could afford to make its full recommended contribution to KTRS for eight consecutive years. After that, Stumbo has said, the $18 billion pension and insurance funds should be on firmer footing. Stumbo did not appear at Monday's Senate committee hearing.
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Sen. Dorsey Ridley, D-Henderson, objected to Stivers' substitute language, arguing that record low interest rates make borrowing so much money a now-or-never proposition. No task force is necessary to know that KTRS is owed billions of dollars to honor the state's commitment to its teachers, Ridley said.
"We knew this was coming," Ridley said. "I just think that we're kicking the can down the road."