by Jacqueline Pitts
FRANKFORT, Ky — Legislation to change the pension plan for future teachers in Kentucky took its first step through the legislative process Thursday, passing the House State Government Committee.
House Bill 258, sponsored by Rep. Ed Massey, would create a new tier in the Kentucky Teachers’ Retirement System (KTRS) for any new teachers hired in the state that would be a part defined-benefit plans like the typical pension plan and part defined-contribution plan more like a 401(k).
Massey told the committee the legislation comes as a result of months of work between lawmakers and education groups that led to compromises presented in the bill.
Over 30 years, the bill will save the state more than $3 billion, Massey said. The bill also includes a stabilization account that can be utilized in the event funding for the plan falls below 90% of its liabilities so the state doesn’t find itself in another deficit situation like the one that currently exists in which the state is the only party legally on the line to pay it back.
Massey noted the bill doesn’t solve the legacy debt issue the state faces with the current plan and paying benefits for anyone currently in the system, but it does avoid adding more personnel to the same inadequately funded system and piling on additional costs to that plan.
The bill contains a supplemental plan with 2% paid in each by the employee and the state; it is portable and an employee could take it with them if they leave the profession, unlike the typical pension plan.
House Bill 258 makes no changes to any benefits provided to current or retired teachers. Education groups say the new plan would be a comparable benefit to the current plan. The new tier would also have an enviable contract for benefits in both sections of the plans
The legislation now heads to the full House for a vote on the floor.