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NKY Lawmakers Split on Teacher Pension Bill that Passed State House

Legislation that would require the state to fund the Kentucky Teachers’ Retirement System on an actuarially sound basis starting in fiscal year 2017 is on its way to the Senate.

House Bill 1, sponsored by House Speaker Greg Stumbo (D-Prestonsburg) and others, including Wilder Democrat Dennis Keene, would require state employers to pay 100 percent of the additional contribution rate needed to fund the KTRS pension fund to keep the fund fiscally sound. Stumbo said the bill will help protect the state’s bond rating—which he said has been hurt by underfunding of the pension system—by sending a message to the bond rating agencies.

“We can make a statement as to what our goal is,” Stumbo said, with that goal being to fund KTRS to the full actuarially required contribution, or ARC. “I believe that … it will improve our bond rating and thus in the long run cost us less money,” said Stumbo.

Over $1 billion to fully fund the KTRS ARC over the next biennium without any bonding is included in the House state budget plan found in HB 303 as passed by the House last week. That bill is now in before the Senate for its consideration.

The bill passed 86-11. 

How Northern Kentucky representatives voted

Voting in favor of House Bill 1 were State Reps. Dennis Keene (D-Wilder), Tom Kerr (R-Taylor Mill), Adam Koenig (R-Erlanger), and Arnold Simpson (D-Covington).

Voting against the bill were State Reps. Joe Fischer (R-Ft. Thomas), Sal Santoro (R-Florence), Diane St. Onge (R-Lakeside Park), and Addia Wuchner (R-Florence).

Rep. Brad Montell, R-Shelbyville, attempted to amend the bill with provisions that would have phased in the KTRS ARC over four years. That plan would have used around $600 million provided in the budget as proposed by Governor Matt Bevin to fund the ARC over the next biennium and around $313 million total over the following two fiscal years to fully fund the ARC over four years.

“A four-year phase-in is an acceptable phase-in by all accounts,” said Montell. “We’re preparing every year to be able to better meet the requirements so that in four years we’re fully funding … with recurring revenue.”

Stumbo spoke against the amendment, saying it would “kick the can down the road” for funding of teachers’ retirement.

“The truth of the matter is, it’s up to the next General Assembly to find those dollars,” said Stumbo. “Here’s what it means… it means that we would appropriate $487 million less in fiscal year 2017 and $457 million less in fiscal year 2018 than what the system needs.”

The amendment was defeated on a vote of 44-53.

Rep. St. Onge, in a post on Facebook, wrote that she was in support of the defeated amendment. She explained her vote against the bill. 

"Before my teachers in my district react, let me assure you that I fully intend to honor our commitment to fund your pension. Period. Just not this way, which gives you a false sense of security," St. Onge wrote. "In two years, under this plan, there will not be enough money to continue funding you. Rest assured, this House vote is just the first step in this political process. This will be reworked in the Senate because they, too, recognize their responsibility to fully fund your plan and they recognize their responsibility to do so in a responsible manner that does not leave continued funding responsibility up to the next General Assembly to figure out."

From the Legislative Research Commission with additional reporting by RCN staff

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