The Kentucky Teachers’ Retirement System, one of the better-funded plans in the Bluegrass State’s woebegone public pension system, showed a considerable improvement in its financial shape for the second year in a row.
The $19.8 billion education retirement system’s actuary reported a 1.3 percentage point increase in its funded status—the money it has to meet its obligations to beneficiaries—from the previous year, to 57.7% from 2017’s 56.4%.
Gary Harbin, executive secretary of TRS, called the numbers “a great turning point” for the plan, aided by a state contribution increase of more than $400 million, which started in fiscal 2016-2017 after years of making little to no payments. “The legislature and the governor are to be wholeheartedly applauded for the financing they put forward.”
Harbin expects improvement to continue should the state’s General Assembly keep funding the system past 2020.
Actuaries had expected the fund to grow by 7.5%, according to a report from Cavanaugh Macdonald Consulting. However, the retirement system returned 10.5%.
The state’s overall retirement system, which includes the teachers’ program, has been the center of a huge dispute in 2018. In the spring, the legislature passed Republican Gov. Matt Bevin’s controversial bill that significantly changed its rules by putting new teachers into a hybrid plan, limiting sick days toward retirement benefits, and altering the way the state makes its contributions.
Following protests, the law was challenged by Attorney General Andy Beshear, a Democrat, who won the case. Bevin then contested the ruling, and the final hearing was in September, airing on local television. The final judgment has not yet been rendered.
However, Harbin told WCPO.com that the outcome of the trial will not determine the solvency of the Teachers’ Retirement System, as the state spending was passed in a separate bill.
“The funding from the state is the primary driver,” he told the publication.
At 31% funded, the entire Kentucky pension system, which includes the teachers’ plan, is one of the weakest in the nation.