KY House votes for plan requiring new teachers to work longer, pay more for retirement
The Kentucky House on Thursday overwhelmingly approved a Republican-backed bill that would change the teacher pension system for new hires, sending it to the Senate for consideration.
Just two hours earlier, the House State Government Committee approved House Bill 258. It would require teachers hired after Jan. 1 to contribute more toward their retirement benefits, capping the state’s obligation at 10 percent of salary, and to work at least 30 years instead of the current minimum of 27 years.
The new plan’s salary replacement for retired teachers would be comparable to what retirees currently get, said the bill’s lead sponsor, state Rep. C. Ed Massey, R-Hebron. Unlike most workers, Kentucky school teachers are not eligible for Social Security retirement benefits, so their pensions are especially critical.
The changes made in the bill would bring a projected savings to the state of $3.57 billion over 30 years, according to an actuarial analysis that was released late Wednesday.
Creating a new tier of teachers in the Teachers’ Retirement System of Kentucky does not fix the system’s $16 billion unfunded liability, the bill’s supporters said. But lawmakers can stop adding onto that debt pile, they said.
“A vote today stops the bleeding,” state Rep. Jim DuPlessis, R-Elizabethtown, told his House colleagues.
The bill proceeds to the Senate, where some members in recent years have expressed a desire for even more extensive changes to teacher pensions.
Last year, Senate Republican leaders proposed the idea of withholding $1.13 billion in the state budget from the teacher pension system — money intended to help make up for the unfunded liability — unless “structural reform” was made to retirement benefits offered to new teachers. The senators later dropped the idea.
Massey arranged for the House committee on Thursday to hear endorsements for his bill from the Kentucky School Boards Association, the Kentucky Association of School Administrators and the Kentucky Council on Postsecondary Education.
The Kentucky Education Association and the Jefferson County Teachers Association, both of which helped Massey draft the bill, said they neither support nor oppose it. KEA President Eddie Campbell told the committee he wished lawmakers were focused instead this winter on raising teacher pay.
“Like many other states, Kentucky is in the throes of an educator shortage,” said Campbell, an educator in the Knox County Public Schools.
“That is real,” Campbell said. “And instead of addressing that problem by trying to make the profession more attractive, we are here today discussing a pension reform bill that will most likely reduce retirement benefits for future hires.”
Democrats in the House protested the proposed pension changes during a floor debate. They said a less generous retirement package would discourage many young Kentuckians from becoming teachers, and it would punish those who went into the profession, anyway, for the state’s failure to adequately fund the current pension system.
“We’re putting a burden on new hires that we wouldn’t put on them if the system were fully funded,” said state Rep. McKenzie Cantrell, D-Louisville.
However, Democrats now hold only a narrow sliver of seats in the Kentucky legislature. The bill passed 68-to-28.
Addressing critics of the bill, Massey said he would prefer to sponsor legislation that put more money into the public schools. But the hundreds of millions of dollars allocated in every state budget to shore up the unfunded pension liabilities makes that difficult, he said.
“I wish we weren’t here today,” Massey said. “I wish that education was fully funded and that this body could fully fund education into the future and improve education with additional revenues. But we have to have those additional revenues from somewhere.”
Under the bill, instead of being eligible for a traditional pension, new teachers would pay into a hybrid retirement package that pairs a defined-benefits “foundational” plan with a defined-contributions “supplemental” plan. Benefits would be enhanced if they worked to age 65, but they could retire with full benefits at age 55 with at least 30 years of service.
Currently, Kentucky teachers on average retire at age 59, according to TRS. A typical retirement income is about $38,800.
