WKU Public Radio News Staff
Wed August 20, 2014
JCTA, Louisville Educators Clash Over Underfunded Teachers' Pension
Louisville educators who support a lawsuit seeking to recoup lost money from Kentucky's underfunded teachers' pension system clashed this week with the head of the Jefferson County teachers' union.
The Kentucky Teachers' Retirement System serves about 145,000 teachers across the state and is underfunded by about $14 billion, largely because the state legislature hasn't in recent years provided the necessary contributions to keep it solvent. New state pension accounting standards to be enacted starting this year will compound that $14 billion liability, raising it to about $22 billion.
The issue was at the center of a panel discussion Monday in Louisville that included Jefferson County Teachers Association President Brent McKim and Chris Tobe, a state pension expert and former Kentucky Retirement Systems board member.
If the legislature fails to take action, the pensions could enter a "death spiral" where it may not be able to make sufficient investments or meet its obligations to pensioners, Tobe and McKim said.
Some, including Tobe, estimate that could happen by 2036.
The issue is at the center of a possible lawsuit from a group of Jefferson County Public Schools teachers.
Proponents of the effort, including Manual High School teacher Randolph Wieck, confronted McKim after the panel discussion over his organization's lack of support, peppering him with questions after the panel discussion ended.
"There is a growing group of people who are upset with the union leadership, because after 13 years, on [McKim's] watch, he have had our pension decline," Wieck said.
Wieck pressed McKim over actions at a May JCTA meeting in which Weick's attorney, Theodore Lavit, was allegedly refused entry to the meeting and prohibited from addressing members about the lawsuit. McKim acknowledged that Lavit wasn't invited, and said he would at some point consider inviting "others in" for future JCTA meetings.
Nationally, judges are overturning efforts by state legislatures to gut public pensions, including cases in Illinois, New Jersey and California. In those cases as in Kentucky, the underfunding was a tool used by lawmakers to balance increasingly tighter budgets.
But McKim said he's consulted with various legal experts whom have told him that the planned suit "has no basis in the law, and that it would be wasting our members' dues money.
"On top of that," he said, "if we're litigating, if we're suing the governor and we're suing the legislators, it shuts down our ability to even meet and talk to them, because they're not going to talk to us if we're suing them."
McKim said he hopes increased pressure by Wall Street credit ratings agencies—which continue to rank the state's pension debt among the worst in the nation—will finally get Frankfort to take action.
The pension issue, he added, is especially concerning for public school teachers because they are not eligible for Social Security benefits. That means they are entirely dependent on their pensions once they retire.
Tobe and McKim blamed the underfunding on former Republican Gov. Ernie Fletcher and his successor, incumbent Gov. Steve Beshear, a Democrat.They also laid blame with Democrats and Republicans in the legislature.
McKim said the legislature could fix the pension by taking advantage of low interest rates with a $2-billion bond to stabilize the fund.