Kentucky Education Groups Offer Alternative Pension Reform Plan

Coalition calls for less generous plans, but nixes switch to DC.

An alliance of Kentucky education groups has come up with an alternative pension reform plan to the one recently offered by Gov. Matt Bevin, which involves moving participants to a defined contribution plan.

“The governor’s plan does many things that, by our estimation, will destroy public service as we know it,” said Stephanie Winkler, president of the Kentucky Education Association, at a news conference. “Most of all, the switch from a dependable, reliable pension to an unreliable and very expensive defined-contribution plan.”

The groups, which represent teachers, superintendents, and school boards, have recommended a less generous defined benefits pension for employees hired at school districts after July 1, 2018, according to the Lexington Herald-Leader. The new tier of teachers and employees would have to work longer, and they would not be allowed to enhance their pension benefits through unused sick leave.

Under the groups’ plan, future teachers would contribute 10% of their pay, with a 6% match by the state government. Retirement eligibility would be based on the so-called “rule of 85,” which means the teacher’s age plus their years of service would have to equal 85. For example, a 60-year-old teacher with 25 years in the classroom could retire on a full pension.  

Additionally, any unfunded liabilities created by new workers would be the responsibility of them and their school district, not the state government’s responsibility. If the pension funding level for the new workers falls below 95% in the future, cost-of-living adjustments for retirees could be reduced or suspended, employees and school districts could be required to increase their contributions, and retirement eligibility rules could be made stricter.

The groups are also calling for the County Employees Retirement System to be removed from the rest of Kentucky Retirement System, and run separately with its own elected representatives.

Tom Shelton, the Kentucky Association of School Superintendents’ executive director, told the Herald-Leader that the groups tried to show their plan to Bevin’s office, but that his office refused to consider any suggestions that did not involve switching to defined contribution accounts.

However, Bevin spokeswoman Amanda Stamper said the groups never offered the governor their pension reform plan.

“The Bevin Administration met with Tom Shelton several times over the last two months,” Stamper said in a statement. “Even though they had several opportunities, neither ever presented an alternate plan.”

According to a new analysis by Cavanaugh Macdonald Consulting, the governor’s pension reform plan would cost taxpayers an extra $4.4 billion over the next 20 years, reports the Associated Press.

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