| KEA Home | Hot Topics | Members Only | About KEA |
 |
| For all KEA legislative activity, visit: |
 |
Keep Kentucky Learning |
|
KEA Action Alert - KEA message on pieces of critical legislation |
|
Friend KY Education Advocates on Facebook |
|
Contact Your Legislator |
|
Legislative Research Commission (LRC) Website |
| School-Based Decision Making Authority at Risk Representative Kent Stevens (D) from Lawrenceburg filed House Bill 322 which would strip the school-based decision making council of its key responsibility to hire a principal and place that authority in the hands of the superintendent. House Bill 322 was heard in the House Education Committee on Tuesday, where it was amended to provide final authority to the council but tie its hands in the process of getting there. KEA opposes both the original version of HB 322 and the committee substitute, which included the amendment. KEA engaged our members to oppose HB 322. As a result of your advocacy and contacts with your legislators, key legislators have realized the wisdom of working out a compromise amendment that will be filed as a floor amendment. As of Friday afternoon, representatives of KEA are still working with legislators and organizations representing school boards, superintendents and school administrators to reach a mutual agreement. We are hopeful that we will have a final agreement early next week. Thanks to these legislators who exerted leadership in working for a compromise: Carl Rollins (D-Midway), chair of the House Education Committee; Derrick Graham (D-Frankfort), KEA member and Frankfort High School social studies teacher; Harry Moberly (D-Richmond), one of the original architects of KERA; and Jody Richards (D-Bowling Green), previous chair of the education committee and Speaker of the House. Please continue your phone calls and emails to all members of the Kentucky House of Representatives and tell them you support final decision making authority remaining with the school council in the selection of the school principal. |
| KEA Board Takes Positions on Issues Having their meeting snowed out on two successive weekends, the KEA Board of Directors met via web conference and conference call on Saturday, February 6. The Board took action on three important legislative issues:
|
| Retirement Issues continue to be a key for the General Assembly KEA is working hard to assure that all members can be assured a sustainable pension and health insurance upon retirement. Pensions continue to be a huge issue in this session of the General Assembly. The Kentucky Teachers Retirement System faces serious challenges due to the state’s practice of borrowing from KTRS pension fund to pay for retired teachers’ health insurance. The Kentucky Retirement System which provides benefits for classified school employees also faces struggles as its security is contingent upon the legislature funding the first step of a funding schedule established to assure that we meet the actuarially required contribution. |
| KTRS Problem The state has been borrowing from the KTRS Pension Fund to pay for KTRS retirees’ health care since 2004—for a total of more than $800 million. The continued diversion of these pension funds jeopardizes both the KTRS Pension Fund and the KTRS Medical Insurance Fund. Every dollar borrowed from the pension fund is one less dollar that KTRS can invest to pay for retiree benefits. Instead of investing all its funds, KTRS currently must cash in about $20 million in investments every month just to provide retirees’ pensions and health care and to continue operating. Approximately 70% of retirees’ pensions come from earnings on investments, not from either their or the state’s contributions. It is estimated that we have fewer than six years to find a workable solution; otherwise pensions and health care for retired teachers are in grave danger. By 2029, both KTRS pension and medical insurance funds will be bankrupt if current practices continue. |
| Background Active members of KTRS have contributed .75% of their salary into the KTRS Medical Insurance Fund for many years. Until the last decade of runaway medical inflation, this was enough to pay for retirees’ health insurance. The special session of 2008 changed the law so teachers hired after 7/1/08 contribute 1.75% to the medical fund. Retirees’ health insurance has traditionally been paid by active teachers’ contributions; the money that active teachers pay this year pays for this year’s retirees’ medical insurance—commonly referred to as “Pay-as-You-Go.” To solve this funding problem long-term, we need to move to a pre-paid basis so that the contributions and interest build up in the medical fund sufficient to fund retirees’ insurance. Active employees pay either .75% or 1.75% into the medical fund. Retirees older than 65 pay a portion of their Medicare supplement, currently amounting to $110.50 monthly. Retirees younger than 65 continue to be covered by the state’s medical insurance plan. These younger retirees pay for their health insurance on the same basis that active employees pay. There is a no-cost premium option for single coverage for these retirees. School districts do not currently contribute to the medical insurance fund, although they realize a significant advantage when teachers retire and are generally replaced by a younger teacher. Governor Beshear has proposed that the state sell bonds to pay back KTRS for a portion of what the state has borrowed to provide retiree health care. While this will certainly help resolve what’s happened in the past, it will not provide funds to pay for retirees’ health care now or in the future. We need a two-pronged approach – first, a way to pay back the huge debt the state has incurred in the years it has borrowed to pay for retirees’ health care; and second, a way to fund retiree health care into the future without borrowing any more money. |
| Process of Working Toward a Solution KTRS Executive Secretary Gary Harbin has been calling attention to this problem for several years. Over the last few months, KTRS has assembled a group of stakeholder representatives including KEA to search for a solution to this problem. KEA has been deeply involved throughout the entire process, with Harbin briefing the KEA Board on the problem and KEA officers and staff fully participating in all discussions. We met several times, with the goal of finding a solution through which all stakeholders share in solving the problem. Other stakeholder groups have pledged support for the resulting solution (see below). Several legislators have expressed their willingness to propose and vote for legislation to put the agreed-to solution in place, so that teachers are assured that their pensions and their health care are secure in the future. |
| The Solution Since the borrowing began, KEA’s position has been that the state should do the right thing and both repay all that it has borrowed and also begin paying for retirees’ health care. As the amount borrowed has increased and the economy and state revenue have declined, it has become apparent that it is not realistically either possible or probable that the state will be able to invest enough money to solve the problem. First, KEA supports Governor Beshear’s proposal for the state to bond the debt it currently owes to KTRS to pay back the previous borrowing. This would result in an immediate infusion of cash to KTRS. To solve the problem going forward, reaching a solution was made more difficult by active teachers’ small raises last year. We anticipate that teachers’ raises will remain low over the next two years. KEA’s position throughout these negotiations was that active teachers’ additional contributions should be minimal in years when teachers receive little or no raises. We asked that retired teachers not contribute more than their annual COLA, which is usually at least 1 ½%. The “deal breaker” throughout our conversations was that KEA’s support is contingent on school districts also beginning to contribute. On February 6, the KEA Board of Directors voted to support the solution through which all parties (active teachers, retired teachers younger than 65, school districts, and the state) bear some of the responsibility for solving this problem. Active teachers and school districts would gradually contribute more each year for six years until they each contribute an additional amount equal to 3% of salary to the medical fund. In 2010-11, the average teacher would contribute about $10 more each month. In 2011-12, the contribution would increase another $10 a month. Younger retirees would gradually contribute more until they pay the same amount that older retirees contribute each month for their Medicare supplement. For 2010-11, their contribution would be $37 per month. In 2011-12, it would increase to $81 per month. The state would begin picking up the cost of medical insurance for all new retirees. This cost would also gradually increase. |
| Kentucky Retirement System The Kentucky Retirement System which provides benefits to classified school employees through the CERS has been facing serious challenges as well. These issues were addressed in a recent pension reform which established a funding schedule to assure that the state meet the Actuarially Required Contribution (ARC) to assure that the system gets back to full funding. This session of the General Assembly will be the first year that the legislature is supposed to make a payment to meet its obligation to fund the ARC. In these difficult budget times it is essential that the legislature keep their promise to adequately fund the retirement system. |
| Stay Connected In addition to the weekly publication of the KEA Advocate, KEA also provides legislative updates through our legislative advocacy site www.keepkentuckylearning.org or you can “friend” us on Facebook at Ky Education’s Advocates. Please keep connected and stay engaged KEA’s members and supporters are our best lobbyists! Leave a message for your legislator’s by calling the toll free legislative message line at 1-800-372-7181 or send an email by visiting www.keepkentuckylearning.org and click on the Contact Legislators link. |
 |
Forward to a Friend Unsubscribe |
