pension

Credit http://401kcalculator.org / Flickr (Creative Commons License)

The head of Kentucky’s Chamber of Commerce says he’s not giving up hopes that lawmakers will fix the state’s troubled pension systems.

Dave Adkisson says his group was disappointed that the recent General Assembly failed to pass both a $3.3 billion dollar bond issue to support the pension fund for teachers, and a bill mandating an independent study of that program.

Adkisson says legislators must eventually act in order to protect not only pensioners, but also the state’s bond rating.

“If Western Kentucky University is building a new building, if you’re building a new city hall, a new courthouse, a new highway, a new dormitory—those things can cost more because the bonds are lower-rates, and the interest rates are higher.”

The teacher’s pension system only has 53-percent of the money it needs to make future payouts to about 141,000 retired teachers. Earlier this year, KTRS officials said if bonds weren’t issued, the state’s required contributions to the system would double by 2026.

Adkisson, a former mayor of Owensboro, also said Tuesday that he hopes the state’s next governor will stick with changes made to Kentucky’s academic standards.

Kentucky LRC

With two working days to go, Kentucky lawmakers still haven’t nailed down legislation to address the state’s growing heroin problem and it’s ailing teachers pension system.

On Friday, legislators from both chambers met for hours, trying to craft compromises on the bills.

A solution is starting to take shape to help shore up the teachers pension system, but the House and Senate remain divided on sentencing guidelines in the heroin bill.

Lawmakers have until 11:59 p.m. Tuesday to pass laws.

Heroin

Representatives and senators were still at odds Friday afternoon over needle exchanges, sentencing guidelines for heroin traffickers, and whether to include a “good Samaritan” clause that would provide immunity to those who report heroin overdoses.

Senate President Robert Stivers repeatedly suggested that the committee stop arguing and produce a bill that only includes points that lawmakers agree on: making overdose-reversing drug naloxone more available and increasing funding for treatment programs.

House Speaker Greg Stumbo’s $3.3 billion bonding bailout of the Kentucky Teachers Retirement System won’t pass this session, but a smaller study-and-finance package may still be in the works.

The retirement system only has 53 percent of the money it needs to make future payouts to more than 140,000 retired and active teachers in the state. The state’s required contributions to the system will double by 2026, according to KTRS officials.

On Tuesday, the Senate rejected $3.3 billion in bonding for the retirement system proposed by the House, replacing it with language that would require a committee of lawmakers and experts to identify problems in the pension system and come up with a report on possible solutions by December.

Now a conference committee comprised of representatives and senators will try to come up with a compromise to the two proposals.

Stumbo, a Democrat from Prestonsburg said the legislature was in a similar situation in 2013 when lawmakers addressed the cousin of the teacher retirement system—the Kentucky Retirement Systems.

“The Senate kind of wanted reforms but it didn’t want to address the pending issue of financial stability and money,” Stumbo said. “We want to make sure that the fund is financially sound, and we’re willing to listen to some of their suggestions on reforms if they’re willing to do something on the financial stability side.”

In that 2013 session, the legislature required the state to make recommended contributions to the KRS, created a separate pension fund for new hires and limited their benefits. The reforms have been considered successful by some, however KRS still only has 21 percent of the money it needs to make future payouts.

Stumbo said bonding should be included in a solution this year because interest rates are favorable. KTRS officials said the state can borrow money at a 4 percent interest rate and a 7 percent return from its investments in the system.

Senate President Robert Stivers, a Manchester Republican, hasn’t said if he would consider bonding in a final bill. But he said he’s willing to compromise.

KRS To Receive $23 Million From BOA Settlement

Aug 21, 2014

The U.S. Department of Justice announced a $16.6 billion settlement between six states’ attorneys general and Bank of America Thursday over fraudulent mortgage-backed securities that fueled the 2008 financial crash. The settlement  includes $23 million for investments made by the Kentucky Retirement System.

Kentucky Attorney General Jack Conway announced the details of Kentucky's share of the settlement in a conference call from Washington.

He said the state will recoup $23 million toward $21.6 million in losses incurred by KRS over fraudulent securities that the pension's investment team purchased from BofA and its subsidiaries.

"Classic securities fraud 101. In essence, that Bank of America entities knew that they were packaging subprime mortgages into the securities that they were marketing yet were not informing investors about the risk inherent in the securities they were selling," said Conway.

State employees with higher pensions should pay more to help the underfunded systems recover, Kentucky House Speaker Greg Stumbo said in a recent interview. One thing Stumbo doesn't want to see is lawmakers floating bonds to help pay for the state’s underfunded pensions.

Kentucky's state pension plans have problems, and a bipartisan legislative task force has approved sweeping recommendations to overhaul them -- including putting new employees in a hybrid plans akin to 401Ks.

The task force -- with an 11-1 vote -- is recommending that the General Assembly start fully funding their pension contributions starting with the next budget in 2014. Lawmakers’ inability to do that is part of the pension plans problems.

A group of GOP House candidates are encouraging one Republican leader to take a bold stance on a pension issue. Republicans Chris Hightower, Jason Crockett, Lynn Bechler, Bryan Lutz and Matt Lockett are all in competitive races for the state House this election cycle.

A relatively new economic think tank in Kentucky has released a report that pushes back on calls to cut the state's pension benefits. The report from the Kentucky Center for Economic Policy says the idea that public pensioners are well-compensated compared to their private sector counterparts is inaccurate.

A group of Kentucky lawmakers has a new summer assignment: shoring up the state’s failing pension systems. At least two of Kentucky’s six pension plans are at a high risk for failure. And their troubles have been highlighted by Bloomberg, the New York Times and the Pew Center.