Our area is blessed to have two school systems that both have a long tradition of excellence.While we compete fiercely with each other on the fields and courts in a friendly rivalry, we appreciate the relationship that is shared between Logan County Schools and Russellville Independent Schools, which produces a positive impact on our community. Both of us are privileged to serve in our roles, and believe that education possesses the power to positively change the future!
On behalf of all of our certified and classified staff, we want to offer our strong support and explain why we cannot endorse the proposed pension reform. We believe the proposal is not “keeping the promise” to state employees who have always met their financial obligations. In its current form, the proposal is actually “cutting the promise” made to employees.
We understand there are issues with all the pension systems and we appreciate the efforts of the Kentucky legislature and governor’s office to tackle this extremely challenging problem. However, we believe TRS and CERS, if funded properly, will be able to meet their financial obligations. The current “one size fits all” proposal does not address the needs of each individual pension in order to fix the crisis. To us, a “one size fits all” solution for Kentucky’s pension issues is like having eight people come to the doctor with different ailments, and the doctor prescribing the same treatment plan for everyone.
The future of education in the Commonwealth rests with our ability to hire quality future educators to continue the current positive momentum. The ability to recruit and retain excellent teachers going forward depends in part on the ability to offer an excellent retirement benefits package. We fear the loss of future quality educators because the current proposal offers a 401k type plan, with no Social Security benefits.
Also, the proposal places control with a new and unproven bureaucracy, and removes control from TRS, which is rated in the top 10 nationwide for teacher retirement investment returns and efficiency of operations. This proposal will produce less retirement income at greater cost and with greater investment risk than the current TRS plan.
The proposal also calls for all active TRS members to contribute an additional 3 percent of their salary beginning July 1, 2018 to “fund retiree healthcare”. Educators have been paying an extra 3 percent and school districts have also paid an additional 3 percent since 2011 for this same reason. This resulted in an increase to our retirement contribution for each person from 9.85 percent to 12.85 percent. This added expense is, once again, pushing the cost to the local districts and employees.
The most troublesome element of the proposal is the breach of the state’s inviolable contract with its employees. The terms of an inviolable contract are not subject to alteration or appeal, and are protected by the state’s very own constitution. If the current proposal is passed into law, costly litigation will most likely ensue because it violates the present-day promise in the following ways:
(1) We believe the five-year suspension of teacher retirees COLA’s violates the inviolable contract. Teachers and employers prefund a 1.5 percent cost-of-living adjustment (COLA) under KRS 161.620. This amount is contributed throughout a teacher’s career.
(2) We believe the forced move at 27 years, or any point thereafter, from the defined benefit plan (DB) to the proposed new defined contribution (DC) plan violates the inviolable contract.
(3) We believe alignment of the upper limit of TRS-eligible compensation for benefit calculation with Social Security guidelines ($127,000 wage cap) violates the inviolable contract.
(4) We also believe the removal of sick days previously accrued and earned from eligible TRS pension earnings is a property right of the employees and cannot be removed from an employee’s pension benefit.
In closing, we would like to state that a promise made should be a promise kept, and that the employees should not be penalized because Frankfort did not meet their financial obligations to the pensions. Educating our children is the greatest investment we as a society can make for our future. It is our hope that the legislators do not pass this bill as currently presented, but find a way to bring all parties together to work on a solution that demonstrates shared responsibility. By fixing each pension system, we are strengthening the Commonwealth and keeping the promise.
Sincerely,
Paul M. Mullins, Logan County Superintendent
Bart Flener, Russellville Independent Superintendent