This year’s Kentucky General Assembly started with the adoption of Policy solutions from BIPPS to address the growing liabilities in our state’s state pension plan for teachers. The passage of HB 258, sponsored by Rep. Ed Massey, R-Hebron, is creating a new plan for teachers entering the Teachers’ Retirement System (TRS), offering them generous retirement benefits while the brunt of the risk is shifted from taxpayers to benefit recipients .

Despite the adoption of this plan and a commitment in recent years to fully fund the Annual Required Contribution (ARC), more can and must be done to address TRS’s current $ 15 billion unsecured debt.

BIPPS has developed the following solutions Dr. William Smithwho leads the Bluegrass Institute’s pension reform team that would bring TRS towards solvency without the “inviolable contract. “

Sick days

  • The inviolable contract does not protect the use of sick days to increase the final remuneration.

  • Stop disease data accumulation to improve final compensation on the day the legislation goes into effect.

  • Current members can deposit the payment for future sick days into an additional account.

“High 3” final compensation formula

  • The final compensation formula “high-3” is not protected by the inviolable contract.

  • Eliminate high-3 for current members who are five years or more away from eligibility.

  • Applies to members with less than 22 years of service or under 50 years of age.

3% multiplier

  • The 3% final compensation formula is not protected by the inviolable contract.

  • Eliminate for current members who are five years or more away from eligibility.

  • Applies to members with less than 25 years of service on the Effective Date.

Health insurance for retirees aged 65 and over

  • Health insurance for retirees under 65 is not protected by the inviolable contract.

  • Access to group pension insurance is protected by the inviolable contract.

  • Government subsidies will expire over the remaining 23.6 years of the TRS depreciation period.

  • Phase of funding the health of retirees 65 years ago through the existing TRS Health Insurance Trust.

Retirees back to work

Anti-spiking determination

We urge the legislature to use the momentum created by the passage of HB 258 and to muster the courage to take the next steps to deal with our public pension crisis. We should not continue on the path of debt-repaying retirees’ pensions on the backs of future generations of Kentuckers, nor should we crowd out the funding of all vital government services to address uncovered pension liabilities.