Legislative News ...

August 21, 2015


The Kentucky Teachers’ Retirement System funding issue is currently being studied by a panel created in June by Gov. Steve Beshear. Information about how you can watch and participate is below.

The 25-member Kentucky Teachers’ Retirement System Funding Work Group, formed after the 2015 General Assembly did not enact a long-term solution for funding teachers’ pensions, is to recommend solutions by Dec. 1.

The governor charged the group with reviewing best practices in other states regarding pension benefits, conducting a comprehensive review of funding options and making recommendations for improving the fiscal solvency of KTRS.

Since 2008, given finite revenue and challenging budgets, the state has been unable to pay the full annual required contribution for teachers’ pensions. Current retirees are being paid by liquidating investments that ideally would be held onto to grow and pay future retirees. In fact, more than $1 of every $3 paid in pension benefits to retired teachers comes from selling the fund’s assets — something that wasn’t necessary less than a decade ago.

KTRS’ actuary projects that, without required contributions, the retirement fund will exhaust all assets by 2036. As of June 30, 2014, on an actuarial funding basis, KTRS reported assets of $16.2 billion to pay total liabilities of $30.2 billion, leaving the fund with 53.6 percent of the assets needed to pay liabilities.

At the first meeting on July 17, Lt. Gov. Crit Luallen told members that no easy options exist, but the fund must be stabilized. The issue impacts every Kentuckian — not just members of the teachers’ plan — because the state’s bond rating will be hurt if a long-term solution isn’t found.

Participate in the Work Group process

Future meetings

All meetings begin at 10 a.m. Eastern and can be watched live online through KET (http://www.ket.org/legislature/) or later (http://www.ket.org/legislature/archives/).

Aug. 28
Sept. 11
Sept. 25
Oct. 16
Nov. 6
Nov. 20

More information

For meeting materials or to comment to the working group, visit the Work Group’s homepage on the governor’s website: http://governor.ky.gov/KTRS-Funding


Friday, March 27, 2015

House Bill 4

House Bill 4 When the 2015 Session of the General Assembly adjourned during the early morning hours of Wednesday, March 25th, House Bill 4 was one of bills that had not passed. House Bill 4, in its original version without amendment, would have provided a long-term funding plan for the Teachers’ Pension Fund. Part of this plan included the issuance of a bond of up to $3.3 billion at today’s historically low interest rates. This bond would have made it possible for the Commonwealth to slowly phase in, over an eight-year period, to the full additional funding needed by the pension fund. Therefore, the plan was not just a short-term fix, it provided a long-term solution.

Although House Bill 4 did not pass this session, the funding plan it proposed will likely remain viable, although potentially more expensive if interest rates rise, when the General Assembly convenes again in January for the 2016 session. A lot of progress was made from last year’s 2014 session, during which the funding plan seemed to attract only isolated interest, to 2015 when the plan became actual legislation and passed out the one of the legislative chambers. Furthermore, the upcoming 2016 session is a budget session when the focus will be even keener on the KTRS pension fund’s needs.

Between now and the start of the next session, KTRS will continue to discuss the funding issue with members of the General Assembly and their staff, as well answering any other questions that they may have regarding the retirement system. KTRS is optimistic that something will be done in 2016 as the pension funding issue needs to be addressed now and all parties are aware that the longer that funding is unavailable the more difficult this issue is to address.

Wednesday, March 11, 2015

House Bill 4

On March 9th, a Senate Committee Substitute to House Bill 4 was approved by the Senate State and Local Government Committee.  The Senate Committee Substitute replaces the original language of House Bill 4 with language creating a task force that would study and develop recommendations on funding and benefits regarding KTRS.   The task force’s findings and recommendations are to be submitted to the Legislative Research Commission for referral to a legislative committee by December 18, 2015.  The task force would be comprised of six members of the House of Representatives and six members of the Senate.  On March 10th, House Bill 4 as amended by the Senate Committee Substitute passed out of the Senate by a vote of 26-10.  House Bill 4 as amended will now be sent to the House of Representatives for that chamber’s concurrence.  If the House of Representatives does not concur, the bill could be assigned to a conference committee where members of both chambers could meet and discuss whether any compromise may be reached.  


Monday, February 23, 2015

House Bill 4

On Monday, February 23, 2015, House Bill 4, the bill that would provide a long-term funding plan for the Teachers’ Pension Fund, passed out of the Kentucky House of Representatives by a vote of 62-31.  It has now been received in the Senate for consideration by that Chamber.  The bill would ensure the retirement security of the Commonwealth's teachers by providing a statutory schedule for phasing into full funding needed by the pension fund. The funding plan would include an immediate infusion into the pension fund of up to $3.3 billion from a bond issued by the Commonwealth.  The bond would help stabilize the pension fund, thus making the phase-in toward full funding possible.  The current, historically low interest rates provide a window of opportunity for this long-term funding plan to be implemented.

House Bill 4, and its progress during the 2015 Legislative Session, may be viewed by clicking on the web link at http://www.lrc.ky.gov/RECORD/15RS/HB4.htm


Thursday, February 12, 2015

House Bill 4

On Tuesday, February 10, 2015, House Speaker Greg Stumbo, sponsor of House Bill 4, presented the bill to the House Appropriations and Revenue Committee. The House budget committee then voted to fund the $3.3 billion Bond which would shore up the Kentucky Teachers’ Retirement System. The House Appropriations and Revenue Committee voted in favor of stabilizing the teachers’ retirement system without any negative votes.

To view the committee meeting, click HERE

To read the article "$3.3 Billion OK's for Teachers' Pensions", click HERE

Friday, January 9, 2015

Important Pension Bill for Teachers Filed

On Friday, January 9th, 2015, Greg Stumbo, Speaker of the House of Representatives of the Kentucky General Assembly, filed House Bill 4 which provides a long-term funding solution for teachers' pensions.  This plan has been a topic of discussion among legislators and has received strong support from teachers and education groups.  The bill would ensure the retirement security of the Commonwealth's teachers by phasing into fully funding the annual contributions needed. 

The components of the funding plan include an immediate infusion into teachers' pension funds of up to $3.3 billion from bonds issued by the Commonwealth.  In filing the bill, Speaker Stumbo noted that current historically low interest rates provide a window of opportunity to develop a long-term funding solution. 

The filing of House Bill 4 is a very important step toward a long-term funding solution for teachers' pensions.  The General Assembly has recessed until February 3, 2015 when Part II of the 2015 Legislative Session begins.  The 2015 Legislative Session is scheduled to adjourn on March 24, 2015.  During the session, House Bill 4 will be discussed among members of the General Assembly and in legislative committees.  Its passage would require approval by both Chambers of the General Assembly and the Governor.   Leaders of both the Senate and the House have expressed their commitment to protecting teachers' pensions.

House Bill 4, and its progress during the 2015 Legislative Session, may be viewed by clicking on the web link at http://www.lrc.ky.gov/RECORD/15RS/HB4.htm


KTRS Financing Plan Presented to General Assembly Committee
KTRS was invited to attend the November 19th, 2014, meeting of the General Assembly’s Interim Joint Committee on State Government to present a financing plan for the KTRS pension fund.  see more...



2014 Legislative Update

The State Budget that was enacted during the 2014 Legislative Session for the 2014-2016 biennium provides KTRS with the basic required statutory funding as well as the installment payments for sick leave compensation, previously awarded ad hoc COLA’s and minimum value benefits.  It also provides a direct appropriation from the General Fund (as opposed to bonding) for the state’s obligation under the Shared Responsibility solution to funding retiree medical insurance.  The State Budget does not provide the additional requested funding needed to maintain the pension fund on an actuarially sound basis.  It states an intention that as debt service is paid off and reduced on bonds issued by the Commonwealth to repay past borrowings from the KTRS pension fund (and to pay prior biennia retiree health care costs), that the payments that are no longer required to be made to bondholders be continued in future biennial budgets as payments to the KTRS pension fund. This potential source of funding is certainly appreciated, but would not be sufficient to maintain the retirement system on an actuarially sound basis.  Tight budgets, a struggling economy and a finite amount of revenue have made it very challenging for the Commonwealth to provide additional funding for the pension fund. Public officials and their staff are aware of the funding issue and KTRS is working with them to find a solution.  The good news is that retiree medical insurance is now established on an actuarially sound basis as a result of the 2010 Shared Responsibility legislation so that this important benefit will continue to be there for active and retired teachers.





KTRS 2012 Legislative Presentation for KRTA
Legislative & Health Insurance Committees Meeting 11-14-2011


~ 2010 REGULAR SESSION Kentucky General Assembly ~

House Bill 540 – A Shared Responsibility Approach
to Funding Retired Teacher Medical Insurance

January 20, 2010 ~ KTRS Applauds Governor’s Proposal
Looking Forward to Long-term Solution to Pension Issue from General Assembly



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