Morgan Watkins|Courier Journal
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Advocates for teachers and government retirees say the new pension reform bill the Legislature's Republican leaders finally unveiled this week is a step in the right direction but still needs improvement.
Stephanie Winkler, president of the Kentucky Education Association, said Senate Bill 1 doesn’t go far enough to honor the promises made to public-school employees.
“Teachers across Kentucky are not happy with lawmakers because they have not been funding their responsibilities,” she said. “The way it’s saving money is putting the brunt of the costs back on the employees, which is not fair.”
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Winkler said some aspects of the Republicans’ proposal have been changed for the better compared to the plan Gov. Matt Bevin and other GOP leaders rolled out late last year. Butshe expressed concern with the bill’s recommended reduction in annual cost-of-living increases for teacher retirement benefits, which would drop from 1.5 percent to 0.75 percent for 12 years.
Winkler also said she disagreed with giving new teachers a “hybrid cash balance plan” that blends features of a traditional defined-benefits plan with those of a 401(k)-style approach.
Jason Bailey, executive director of the Kentucky Center for Economic Policy, said the average teacher would lose about $73,000 in lifetime income under the proposed cost-of-living cut. "And that's something that people were counting on," he said.
Bailey said Kentucky has gone through multiple rounds of pension reform in the past, all of which involved either slashing benefits for state workers and teachers or making those people contribute more of their own money.
“The benefits are pretty modest now, especially for new people walking in the door," he told Courier Journal.
A lack of funding is the real challenge legislators need to address, according to both Bailey and Winkler.
“We don’t have structural problems with our retirement systems. We have funding and revenue problems,” Winkler said. “It’s not going to happen overnight, but we have to have lawmakers that make courageous decisions to find new revenue so that we can fund all of the programs necessary for citizens.”
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Jim Carroll, president of an advocacy group called Kentucky Government Retirees, agreed.
The problem with Kentucky’s pensions systems isn’t the benefits employees and retirees are receiving, Carroll said. It’s the dearth of funding necessary to cover the obligations already promised to those people.
“It doesn’t matter how much you reform it," he said of the pension systems. "We still need revenue to meet our needs."
Senate Bill 1 would limit state workers' ability to use their accumulated sick days as credits to help them reach retirement eligibility faster. Carroll believes that could be challenged as a violation of the “inviolable contract,” which is a term that refers to language enshrined in state law that guarantees government employees will get the benefits they were promised when they got hired.
“We’ve made sacrifices already,” he said of state employees and retirees. “We can’t keep slicing the pie into smaller slices. We need a bigger pie.”
Larry Totten, president of the nonprofit organization Kentucky Public Retirees, said a friend of his, who is in his early 60s and faces health-related issues, plans to retire before the proposed reforms are enacted while he still can utilize all his unused sick leave.
Totten said he expects to see an increase in state employees retiring this year before SB 1 (if approved) would take effect, just as his friend plans to do.
"I hope I'm wrong because state government's going to have a brain drain if that happens," he said.
But he praised legislators for revising the pension reform proposal Bevin unveiled last October.
"I have to give them credit for stopping that plan from rolling forward in the legislative process and listening and then coming back and revisiting this," he said.
Eric Kennedy, director of governmental relations for the Kentucky School Boards Association, said legislative leaders have "moved in the right direction" with SB 1, although certain provisions could impact financially struggling school districts negatively.
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One potential concern Kennedy pointed to was a section of the bill that appears to require school boards to contribute a small percentage of payroll to the Teachers' Retirement System for employees who would get the hybrid cash balance plan.
"We're in a situation almost of a perfect storm," Kennedy said, where cost increases of any kind could challenge districts whose state funding has been cut repeatedly over the years.
Brent McKim, president of the Jefferson County Teachers Association, is appreciative of the changes legislative leaders have made to the proposed reforms but said there are still significant problems that make the current version of SB 1 unacceptable.
“It would be a real setback for Jefferson County because I think it would make it much harder to attract and keep quality teachers," he said, highlighting the reduced cost-of-living adjustment and hybrid cash balance plan as problematic.
McKim expressed interest in working with legislators to resolve JCTA's concerns.
“If we could address some of these remaining issues ... I think we could be very close to a common-ground solution," he said.
Morgan Watkins: 502-582-4502; mwatkins@courierjournal.com; Twitter: @morganwatkins26. Support strong local journalism by subscribing today:www.courier-journal.com/morganw.
