FRANKFORT, Ky. (AP) — A consulting firm says the pension system for Kentucky’s public school teachers has more money and less unfunded debt after the state legislature decided to fully pay its annual funding request.
The Kentucky Teachers’ Retirement System is about $14.3 billion short of the money it needs to pay retirement benefits over the next three decades. But it now has 57.7 percent of the money needed to pay that debt. Last year, the system had 56.4 percent of the money required to meet its obligations.
A report from Cavanaugh Macdonald Consulting showed actuaries assumed the system’s investments would grow by 7.5 percent. Instead, they grew by 10.5 percent. But pension system Executive Secretary Gary Harbin attributed the improved numbers to the legislature’s increased spending. From 2012 to 2016, the legislature never approved more than 74 percent of the system’s funding request. The legislature has approved 97 percent of the agency’s funding request in the past two years, plus 100 percent of the request over the next two years.
“This is a great turning point for us,” Harbin told members of the system’s governance and audit committee on Tuesday. “The legislature and the administration are to be wholeheartedly … applauded for the financing they put toward this pension plan.”
The teachers’ retirement plan has been a lightning rod in 2018. In the spring, the Republican-controlled legislature made some changes to the system, including moving all new teacher hires into a hybrid plan and limiting how teachers can use sick days in calculating their retirement benefits. It also changed how the state pays off its pension debt, requiring more money at first but savings over time.