Earlier this summer, the Kentucky Teachers’ Retirement System marked its 80th anniversary, a landmark moment for an agency that provides economic security for tens of thousands of women and men who have dedicated most if not all of their careers to public education and serving students--a noble endeavor I’m grateful for.
The agency began on July 1, 1940, with a $1 million appropriation, the equivalent of $18.35 million today. That figure now stands at nearly $21 billion, and there’s another $1.62 billion set aside to cover future retiree health insurance costs.
Like all public retirement systems across the country, KTRS has weathered some difficult times, with the Great Recession and the economic fall-out of COVID-19 being the biggest hurdles over the past dozen years. The system has a sizable long-term liability, but still has almost 60 percent of what it needs to cover promised benefits in the years ahead, a funding level that easily outpaces most of the state’s other public retirement plans. With continued proper funding of the pension promise, it will have 100% coverage in 24 years, just 12 budget cycles.
Even with the challenges it faces, KTRS has nevertheless averaged nearly eight percent annual investment growth since 1990, which is comfortably above its yearly goal. Since 2008, those investments have earned $14.5 billion, which is $3.6 billion more than its peers on average. This kind of sustained success is remarkable – and it calls into question why the majority party in Frankfort wants to tinker with it.
Why is it that many teachers feel so constantly threatened in Kentucky? Budgets keep getting cut, local districts' burdens are constantly increased, and money is shifted around so some can claim record high dollars are going into the SEEK formula while many other education areas, which are a growing financial cost for familie; such as textbooks, transportation, professional development and higher education keep getting cut. All the while we are nearing near pre-KERA levels of funding disparities in many districts around Kentucky. This is dangerous territory that took Kentucky Supreme Court intervention to fix back in the late 1980s.
More recently, former Governor Matt Bevin sought in 2017 to eventually take teachers out of KTRS entirely, even though actuaries said moving to a 401(k)-style plan would cost taxpayers $4 billion more by diverting contributions away from the long-term liability. What the General Assembly ultimately passed – and which was later thankfully struck down by the Kentucky Supreme Court – would also have had the state pay more so teachers could get less. See the trend and pattern here?
Many in the majority say the system is unsustainable, or like buying a house that is too expensive. We didn’t buy this house, we inherited it, and the extremely short sighted decisions that created the expense. Cutting the pay and benefits of those working in it is not anything we need to do; quite the contrary. It’s not a question of sustainability at all, it’s a question of priorities.
The majority likes discussing tax breaks that take money out of public education and then give it to wealthy Kentuckians. How is it they think we can afford that and not investments in education we know pay dividends? The cruel hoax of growing our way out of the problem is no answer and hasn’t worked. If tax breaks that take money away from students and teachers are a priority, then why not use that money instead for 24 more years to pay off the mortgage that we ARE obligated to pay versus giving it to folks who don’t need and it doesn’t do the rest of us any good? See: (http://eprints.lse.ac.uk/107919/1/Hope_economic_consequences_of_major_tax_cuts_published.pdf)
Some in the majority say we need to pay more on the front end, and a little less on the back end to recruit and retain quality teachers. Perhaps, but where is the corresponding pay increase bill to do that then? I filed a bipartisan one, and Governor Beshear even put raises in his first budget, only to have the majority not address either proposal. The majority may say we just can’t afford it (but are eager to push tax breaks and other schemes that hurt public education). Then where are the proposals to raise revenue so we can? I filed one with a republican sponsor only to be ignored by his majority. See the trend and pattern here again?
The issue promises to return when the legislative session begins early next month. Last week, two of the General Assembly’s committees I serve on spent time reviewing the latest proposal, which would put teachers hired in 2022 and beyond into a hybrid system that would shift more risk onto them and ultimately the schools themselves, since they would have a tougher time luring the quality instructors our students deserve.
Many local superintendents say we need more teachers, not less. And the Legislative Research Commission report number 463 says salary and benefits are the biggest barriers to recruitment and retention. This new proposal cuts new teacher pay and benefits when we need to be increasing them in order to serve the customer (students) the right way.
The Kentucky Education Association, which represents 44,000 teachers, said the proposal would require these new educators “to work longer, pay more into the plan, and ultimately receive a lowered guaranteed benefit than current retirees.”
Many of my colleagues and I agree that it makes little sense to change a system that has worked well for the last 80 years and is well-positioned for the decades ahead as long as the state continues making its required contributions. Now is especially not a good time to consider this type of systemic change, since the public cannot even register concerns in person due to COVID-19 restrictions at the Capitol. Even still, there were teachers protesting this bad, unnecessary bill outside by the floral clock last week in the cold and rain.
Something else to keep in mind is the fact that most teachers are not eligible for Social Security, a decision locked into place in the 1950s. As such, those who retire from the profession rely almost entirely on what they get from KTRS. That monthly payment is about $3,200 on average, and when you factor in retiree health insurance, the system pays out more than $2 billion each year. Nearly nine out of 10 retired teachers getting retirement checks still live in Kentucky, meaning most of this money stays in the commonwealth.
The misguided legislation debated last week comes at a time when Kentuckians arguably have a greater appreciation than ever for what teachers do. They pivoted to online learning in the spring with almost no time to prepare, and they’ve since done an incredible job despite the inherent challenge of teaching online during a pandemic.
They and their fellow school workers should be applauded for this work, not be told that they’re “poisoning the well,” as one legislator said last week, by actually advocating for causes and candidates seeking to strengthen public education. Some republicans say they wish teachers would stay out of politics. That’s not how a democracy works. I say we need to get out of their pensions and classrooms so they can concentrate on students like they want and were trained to do. Politics needs more openness, not less, more transparency and access, not less.
Watch out again because the majority party has a proposal to significantly reduce open records and open meeting requirements. Why the need to attack openness and transparency either verbally or with legislation? Another trend and pattern. Pay attention to redistricting coming up so they don’t make it easier to attack teachers and hide from the truth by gerrymandering safe districts for themselves. Politicians should not be able to pick their voters, but rather voters should choose their politicians with #fairmaps (https://www.lwvky.org/).
It is too soon to say what will happen to this proposed retirement bill, which is still being finalized but should be filed not long after the legislative session starts next month. With only 30 working days, however, I believe our time would be much better spent focused on passing next fiscal year’s state budget and finding ways to help Kentuckians overcome the challenges brought on by the pandemic, not incessantly attacking the folks that are educating our economy of tomorrow (https://www.americanprogress.org/issues/education-k-12/news/2020/08/26/489788/better-learning-outcomes-can-help-kick-start-economy/)
If you would like to let me know your views about this or other issues, you can email me at joe.graviss@lrc.ky.gov, or after 12-31-20 at joe@joegraviss.com or you can call the toll-free message line at 800-372-7181, or after 12-31-20 at 859-433-4392.
It’s been an honor working hard for you these past 2 years as a state representative. I wish the new 56th district state rep and the new 7th district senator all the best as they begin working for us all. You can reach them by calling 502-564-8100 and asking for the 56th rep or 7th senator.
As we wait to see what happens, I want to end by wishing you a Merry Christmas, and I certainly hope the new year is better for you – and for all of us.
Thanks for all you do and holler anytime. Take care and God bless you and Kentucky.
Joe Graviss
56th District Representative
Kentucky House of Representatives
P.O. Box 1002
Versailles, KY 40383
859-433-4392