Pension controversy heats up

Published 2:35 pm Friday, March 30, 2018

The recent pension issue regarding Kentucky educators has just taken a large, controversial turn. The bill, which has caused a massive upheaval among educators throughout the state, was passed late Thursday evening amid protests outside the state capitol.

The controversy, according to the Lexington-Herald Leader, stems from the bill being disguised within a different bill relating to sewer regulation. The bill was passed quickly without much opportunity for the public to analyze it. Rep. Chad McCoy was quoted as saying, “We listened to you, we heard your concerns and we took those things out.”

The summary of the bill states that after January 1, 2019, teachers hired would not have a typical pension, but they would be put into a hybrid cash-balance plan at Teachers Retirement Systems of Kentucky. The summary also states that one of the biggest contentions of the old bill would not be present anymore — the reduction of the 1.5 percent cost of living adjustments. To elaborate, a retired teacher receives adjustments to offset the gradual rise in cost of living. The old bill, as it was, would have slashed that adjustment in half for the first 12 years of retirement.

The cash-balance plan is said to be less generous than the typical pension, but more dependable than a 401(K)-type plan. This cash-balance plan also does not offer the four percent annual return for teachers. After Dec. 31, teachers will not be able to accrue new sick days to put toward their retirement. Sick days received before this date can still be put into their pension.

Other changes include, but are not limited to raising the retirement age to 65 or to follow the “rule of 87” which means that the teacher’s age and years of service must amount to 87 or more before being eligible for retirement. The contribution rates would rise as well.

‘Introducing a cobbled-together pension bill grafted on to a sewage bill in the waning days of the session without actuarial analysis and an opportunity for meaningful feedback is an insult to stakeholders,” stated Jim Carroll, spokesman for Kentucky Government Retirees.

Middlesboro Independent Schools Superintendent Waylon Allen stated, “I urge the community to stand behind our public school teachers. It seems there is a larger agenda behind what is currently happening in Frankfort — an anti-public school agenda.”

Gov. Matt Bevin tweeted after the passage, “Tonight 49 members of the Kentucky House and 22 members of the Kentucky Senate voted not to keep kicking the pension problem down the road. Anyone who will receive a retirement check in the years ahead owes a deep debt of gratitude to these 71 men & women who did the right thing.”