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As the Treasurer of the Commonwealth of Kentucky, I serve as a member of the board of trustees of the Kentucky Teachers' Retirement System. In both capacities, I am very interested in the dissonant nature of recent media reports about public sector pay and pensions.
These stories typically feature angry politicians, disgruntled employees and frustrated taxpayers. In stark contrast to these negative reports from around the country of conflict and confrontation, I wish to recount a Kentucky success story realized through compromise and cooperation, which benefits both taxpayers and public sector teachers.
Kentucky's teachers have a reasonable retirement benefit, funded in large part by mandatory deductions of greater than 10 percent of their pay during their careers. Teachers do not participate in Social Security and rely on their Kentucky pension benefit for retirement security. The Kentucky Teachers' Retirement System has been providing retirement security to teachers for more than 70 years and has some of the lowest plan administration costs of any public plan in the country.
Last year, the Kentucky Teachers' Retirement System Board of Trustees brought together a coalition of people to develop and implement a solution based upon a recognition that we all have a shared responsibility to shore up funding of medical benefits for retired teachers. The board worked tirelessly to create a coalition that included retired teachers, active teachers, school boards, school superintendents, regional universities, a bipartisan group of legislators and the governor.
Unlike the all-or-nothing stand-offs that appear to be escalating between public employees, legislatures and executive branches in several states, all of our coalition members placed the common goal of finding a workable solution first and crafted legislation (H.B. 540) creating a sustainable method of funding these critical benefits. It is noteworthy that Kentucky teachers voluntarily agreed to a significant increase in their monetary contribution to make a solution possible. And, in a remarkable testament to the efforts of all involved, both chambers of the General Assembly passed the legislation unanimously.
The "shared responsibility" solution appears to be working very well. With everyone living up to the terms of the compromise, we managed to eliminate $3.3 billion in future unfunded taxpayer liability while simultaneously protecting medical benefits for retired teachers. In short, the solution is good for teachers, good for taxpayers, and good for the Commonwealth of Kentucky.
Although there is still much to do in addressing public pension issues, it is important that we give credit where it is due and to that end the coalition members, and Kentucky teachers in particular, deserve to be commended.
Perhaps a few of our sister states appearing in the news could benefit from taking note of this Kentucky success story.
Kentucky State Treasurer