Senate approves state budget that could take $1.13 billion from teacher pensions
The Kentucky Senate passed a state budget bill Thursday taking aim at school teachers in several ways, such as dropping the guaranteed $2,000 pay raise promised by Democratic Gov. Andy Beshear and withholding $1.13 billion in their pension funding unless “structural changes” are made to cut retirement benefits for newly hired teachers.
Teachers who are locked out of the state Capitol because of the novel coronavirus shutdown said they were outraged that lawmakers would seize on this “time of crisis” to try again to reduce their pension benefits. Past efforts by lawmakers to change teacher pensions resulted in protests at the Capitol and statewide sick-outs.
“I feel like we’ve been slapped in the face,” said Eddie Campbell, president of the Kentucky Education Association in a video posted on Facebook.
“We don’t need to be making these decisions when the voice of educators, the voice of the public, the voice of the citizens of Kentucky, aren’t there to make sure your concerns are being expressed,” Campbell said.
The state’s two-year spending plan now returns to the House, although the Republican-led General Assembly departed Thursday for a one-week break to reassess its schedule because of the coronavirus. A committee of House and Senate members will negotiate a final budget, which must be approved before lawmakers adjourn April 15.
Unlike Beshear’s budget plan, unveiled in January with pay raises and slight increases in state spending for many programs, the Senate budget reflects the recent partial collapse of the economy due to mass layoffs and frozen consumer spending as governments try to curb the spread of COVID-19.
It would shovel $211 million more than Beshear did into the state’s “rainy day” reserve fund, preparing for new demands on state services as Kentuckians are thrown out of work; carry less debt; and include “bumpers” to halt spending increases in certain areas if the state falls short of revenue projections.
For example, Beshear and the House budget included 1 percent pay raises in each of the next two years for state employees, most of whom haven’t seen across-the-board raises in a decade. But in the Senate budget, they would not get a raise in the second year unless the General Fund and Road Fund collect all expected sums.
The Senate wanted a plan “to ensure that we have a solid, responsible budget, a budget that recognizes that the next two years may bring a level of uncertainty that we have not seen in decades in this commonwealth,” Senate budget chairman Chris McDaniel, R-Taylor Mill, told his colleagues before they voted 24-to-7 to approve it.
Several Democratic senators objected to parts of the budget, including the language redirecting more than $1 billion in teacher pension funding unless newly hired teachers get a less generous retirement benefits package. This is not how such an important piece of public policy should be settled, said state Sen. Reginald Thomas, D-Lexington.
“I can’t go along with that, I think if we’re gonna fully fund the pension system, then let’s fully fund it,” Thomas said. “We made a commitment to those teachers for years. A pension is a promise.”
Among the highlights of the Senate budget, it:
▪ Steers $1.13 billion in actuarial recommended contributions for the Teachers’ Retirement System of Kentucky into the state’s Permanent Pension Fund — a holding account — unless there are cuts in the benefits provided newly hired teachers. If the benefits changes are not made by Aug. 1 of each fiscal year, then that year’s funds would go into the primary pension fund for state workers at the Kentucky Retirement Systems.
▪ Increases the SEEK per-pupil base guarantee funding for school districts to $4,161 in each fiscal year. SEEK funding would rise to $4,112 by the second year of the House budget compared to $4,040 in Beshear’s budget plan. But the Senate plan would make school districts use their SEEK funding to cover other spending they might want, such as teacher pay raises and textbooks and instructional materials.
Beshear’s budget handled those items separately, earmarking funds for the $2,000 teacher raises that were a cornerstone of his election campaign last year. Beshear also budgeted a separate $11 million a year for textbooks and instructional materials.
The House budget mandated 1 percent pay raises for teachers in each of the next two years and set aside $5 million a year for textbooks and instructional materials.
Teachers could still get raises from the Senate budget if that’s how school districts choose to spend their SEEK funds, McDaniel said Thursday.
“We leave it to the school superintendents to decide exactly how those moneys work,” McDaniel said.
▪ Cuts tens of millions of dollars in pension assistance the House had proposed for public employers that work with state government, including $23.3 million less annually for local health departments, many of which already are struggling financially.
▪ Removes $14.3 million intended for recruitment and retention of state social workers, although McDaniel said there would be adequate funds in the budget to hire 50 a year in new social workers. Beshear’s budget called for hiring 350 social workers to deal with Kentucky’s epidemic of child abuse and neglect.
▪ Gets new revenue from one source, a a slimmed-down House Bill 32, which originally would have raised $94 million over the next two years with new taxes on vaping and other tobacco products, although not cigarettes. As amended by senators, it would only tax vape products to raise $25 million over the next two years.
▪ Mirrors the House budget by cutting $2.5 million in annual state aid traditionally included for local libraries. The loss of this aid would have a huge impact on small, rural libraries that receive much of their funding from the state, such as those in Ballard, Carlisle, Hickman, Knott and Livingston counties.
Once the two chambers agree on a budget, Beshear will have 10 days, excluding Sundays, to sign it into law or veto items in it. Lawmakers would have to return to the Capitol to consider whether to override any gubernatorial vetoes.
This story was originally published March 19, 2020 at 6:21 PM.
