2017-09-20 / Opinions

Public pension crisis: You can help


Growing up I always knew I wanted to serve the public in some capacity so that I could help others. It was because of that desire that I chose teaching. When I made that choice, I did so out of a passion to serve others, knowing that I would not make a huge salary but that I would make an impact on shaping the minds of Kentucky’s greatest asset, our children. When I began my career 29 years ago, I did so with a very small salary but had the promise of good health insurance and a decent retirement. I also had the promise that if I worked and did not use my sick leave, that I could save those for future use in the event of a catastrophic illness, or when I retired, be paid for my unused sick leave as part of my retirement. Over the years that promise has dwindled. Our health insurance is very costly and covers very little. Teachers and classified school employees have had few pay raises, and have not had a cost of living increase (COLA) in over 10 years. About the only financial benefits left for educators are the pay out of accrued sick leave and our Defined benefit pension plan.

The first year I taught I made so little as a teacher that I supplemented my income by working in the evenings and on the weekends at Walmart. After that year the Kentucky Education Reform Act (KERA) passed after superintendents from small school districts filed and won a lawsuit against the state for equitable school funding. When passed, teachers for the first time in many years were given a pay raise. School districts in smaller areas could begin to compete with larger districts and for once have a level playing field. That is no longer the case. School districts in eastern Kentucky have been hit very hard by the loss of our coal industry. Districts have been faced with making difficult decisions so that budgets can be met. Those decisions always minimize opportunities and access for our children. Kentucky’s public servants and children are once again placed in the crosshairs of our state legislators and dwindling state revenue as they attempt to replace funds left unpaid to public pensions accounts and properly fund public education.

Residents of the State of Kentucky probably wonder what all the commotion is about. This is a problem that has been brewing for many years and one that will not be easily solved. Teachers, classified school employees, state troopers, social workers, firemen and all other state employees are placed into one of the eight state-managed retirement systems on their first date of hire. Most of those systems fall under the umbrella of Kentucky Retirement Systems (KRS) but teachers belong to the Teachers Retirement System (TRS). Each of these systems operate with three contributors — the employee, the employer, and the state of Kentucky. Employees and employers have faithfully paid their contributions since the creation of the system, the State of Kentucky however has not and over many budget cycle years, our state legislature has dipped into the money contributed by our employees and employers to fund various special interest projects. Once they dipped into these funds, they spent many years not paying back the money that was owed, creating a chasm that has led to the current pension crisis. In addition to the pension system crisis, our state legislature has failed to fully fund public education and has placed a great deal of the burden of operating a school district to the local school boards.

Our Governor and legislature have been discussing pension reform over the last few weeks. A report was made by an outside firm that made several recommendations for how to fix the current pension crisis in Kentucky. These recommendations placed the burden of the fix on those that have faithfully contributed to the retirement system — the employee and the employer! One of the recommendations suggested moving all public employees to a 401k-style Defined Contribution plan. When created, 401k-style plans were to be utilized as a supplement only to a primary retirement account. Defined contribution-type plans are designed on the preface that the employee has a primary retirement account, such as Social Security, and that the employee will live only 20 years past retirement age.

Teachers, and some police and firefighters in the Commonwealth and about 17 other states, have a problem with this theory. The federal government many years ago passed federal legislation that removed those employees from Social Security and penalized them for any contributions made to Social Security outside of their primary employment. The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) eliminate the ability for teachers, and some police and firefighters, to draw the full amount paid into Social Security from jobs outside of their public service job and eliminate their ability to ever be eligible to draw spousal death benefits. Many of these public servants are forced to work other jobs to support their families. They contribute the full amount of Social Security and then at the age in which they become eligible, like all others, have what they should be able to draw based on what they contributed reduced to a minimal amount. In a nutshell, switching state employees to a Defined Contribution type of retirement system would make this their only form of retirement income.

Another recommendation is to make local school districts and employees contribute more towards their retirement. How does this affect the average citizen? Local school district would have to offset this new requirement by making cuts to their already depleted budgets. These cuts will reduce staff and increase teacher to student ratios. These cuts will reduce the number of policemen and firemen and therefore reduce protection to citizens.

The Governor and legislature have placed a fear on public employees, public employee retirees, public school districts, and families throughout the state. The Governor has stated that if we do not adopt his way of thinking then he will make across-the-board cuts to all public agencies, further reducing what each of those entities has for operations. Why? Legislatures of years past have refused to have real discussions and pass real pieces of legislation that would reform our archaic tax system and generate true revenue streams so that all Kentuckians could receive the public services they so desperately need.

The education of our children is THE single most important task we face for the success of our state. For this great commonwealth to succeed we must entice the best to teach in our public schools.

The suggestions offered by the Governor’s PFM report do not attract new policemen, firemen, or any other public servant. In fact, the suggestions and potential legislation punish those that have placed trust in our state government and further drive new potential public servants into other professions, or other states.

One could say that we are in the same shape we were in in prior to the passage of the Kentucky Education Reform Act of 1990. Why? How can I help? Encourage your Governor and state legislators to reform our tax system, create new revenue streams, and pay what they owe the public servants of the Commonwealth. Encourage them to leave employees’ benefits as they are and to quit placing the burden of their mistakes on the backs of those that have given so much. Encourage them to fully fund public schools and all other agencies so we can truly serve this great commonwealth.

Regina Brown teaches in the Letcher County Schools. She is president of the Letcher County Teacher’s Organization President and board member of the Kentucky Education Association.

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