Six area school district superintendents addressed the media this morning to relay to the community their recommendations for a “Shared Responsibility Approach” to the Kentucky Teachers Retirement System (TRS).
This is in response to proposed changes to the state pension fund that are expected to be released by Gov. Matt Bevin’s administration in advance of a special legislative session in November. The current proposal is to shift the TRS into a Sociel Security/ 401(k) Plan. Historically, teachers have been excluded from 401(k) because TRS is more secure and less expensive than Social Security.
Matt Robbins, Superintendent of Daviess County Schools, explained that teachers do not pay into Social Security and therefore can not receive any Social Security benefits, either from a public job they may have held or from a spouse. They are therefore completely dependent on TRS for retirement.
Since 2008, the legislature has failed to pay $1.9 billion, which has caused a compounding effect. Currently, the KRS is $33 billion in debt. The issue has lasted several administrations crossing different political parties.
Robbins says the issue influences everyone for three reasons:
- The proposed pension reform could impact the quality of teachers.
- It affects the quality of education of our children.
- And it increases the cost to taxpayers.
“We do not think the current proposal is what’s best for our teachers and retirees,” said Scott Lewis, Superintendent of Ohio County Public Schools, explaining that adding teachers to Social Security is a liablility because the Social Security system is already stressed with projections that it will run out of money by 2034. “It doesn’t make sense to add more people to the Social Security payroll and escalate the depletion of those funds.” Additionally, Lewis stated Social Security is controlled by the Federal governmnet, so the state would lose control which further inreases risk to Kentucky taxpayers.
Recruitment and retention of teachers is also a concern with the newly proposed 401(k) pension reform plan. “There will be an impact on our youth,” said Kyle Estes, Superintendent of Hancock County Schools. “We all know that teachers do not enter the field because of the pay or benefits. But one major draw is the retirement system. If the pension promise is broken, this profession will be less attractive to future generations.” Estes’ concern is that under the new proposed plan, teachers will retire early and move away to teach in other states. “We will lose some of our best teachers, which will hurt kids and produce a negative economic impact at the same time.”
Shared Responsibility Approach:
“For our purposes we support a shared responsibility solution, where we work together – both employees/employers and retirees for what is best for Kentucky,” Robbins explained. “And most importantly, what is best for Kentucky’s kids. Kentucky must undergo significant tax reform that results in more revenue. This affords all people a better plan that costs less to support and maintain and supports growth for Kentucky.”
A similar shared responsibility approach was used in 2010 to fix the health insurance fund. In that case, over a six year period, employees (teachers), employers (Boards of Education), and the state each contributed 3% toward the solvency of the health insurance fund.
“We feel like we’ve accomplished a Shared Responsibility Approach successfully with the health insurance fund, and we feel like that’s achievable again,” Robbins said. “In fact, there aren’t any other options at this point that we could entertain.”
What can we do?
“This issue will affect every taxpayer and every resident in Muhlenberg, McLean, Ohio, Hancock, Daviess County, and Owensboro – and everyone else in Kentucky,” said Robert Davis, Muhlenberg County Superintendent. “We are working with one another and doing our best to ensure everyone is aware this issue is not limited to teachers or school employeers or government workers.”
Davis, speaking for the other five superintendents in attendance, asked for everyone to get involved first by being informed. Then by contacting their elected officials by calling the Legislative Call Center at 1-800-372-7181.
“We are asking people to relay this message: ‘We support a Shared Responsibility Plan to sustain the Kentucky Teachers Retirement System. We do NOT support a Social Security/401(k) Plan.’ ”
Dr. Nick Brake, Superintendent of Owensboro Public Schools, emphasized that economic growth is spurred by investing in education. “We have to remember that schools are successful, and kids are successful, because of excellent teachers! We simply can not afford to risk a future in which school districts are bankrupted by crushing financial liabilities – while at the same time risking an exodus of educators.”