About that 3 percent ‘pay cut’ in pension plan? Teachers, workers say they’re stumped.
It's not clear why.
Bevin's plan would amount to a 3 percent pay cut for nearly 208,000 public employees, most of whose wages have been stagnant for years. It would shift
But unlike the beleaguered pension funds maintained by TRS and KRS, those insurance funds are steadily growing year by year.
A decade ago, new federal accounting standards pressured the states to "pre-pay" their retiree health insurance funds rather than stick with the "pay-as-you-go" model, where today's workers covered health care costs for today's retirees. Since then, public employees have contributed part of their salaries toward their retiree health insurance funds, which invested the fast-swelling assets for those employees' future use.
This infusion of cash has made a big impact. As of 2016, the TRS insurance fund held
"We're very happy with where we are," said
So why lift even more money from public employees' paychecks?
In an interview Tuesday with the
"We're asking them simply to contribute 3 percent," Bevin said in the interview.
"Health care to retirees has come at no cost to them," Bevin said. "And this is simply saying that we're asking participants to put 3 percent -- active participants to put 3 percent toward their existing health care, knowing that when they retire, this is a benefit that they'll continue to get that's not even accounted for actuarially. So there's huge costs to the state, and this is a tiny token amount that people are being asked to exchange for something of tremendous value to them."
Public employees this week said the governor's explanation puzzled them because they already do, in fact, pay toward their retiree health care, and also, they consider 3 percent of their salary more than "a tiny token amount." For a school teacher, that deduction could amount to
"There is no actual justification for doing this other than -- forgive me -- trying to appease some carpetbagger knothead from
Smith said
"It doesn't make any logical sense," Smith said. "It's almost as if the politicians just want to make it so miserable for people to work for the government that nobody will do it anymore and, as a result, public services will be terrible. That's about where we are now. I hear from single mothers who say, 'Dave, I'm going to have to seek assistance from the same state social services office I work in.' It's humiliating for them."
In a prepared statement this week, Bevin's office said the retiree insurance funds at TRS and KRS still face unfunded liabilities in the billions of dollars, which larger contributions would help reduce.
"Recently, the focus has been on the precarious financial pension situation," Bevin spokeswoman
"With ever-increasing health care costs and premiums for those in the private sector, this investment should provide current and future teachers and public servants peace of mind. Rather than facing uncertainty, they will know their future health care plan is being put on solid ground to cover their health benefits at retirement," Stamper said.
But
"The idea that we've got to get to 100 percent funding levels with everything right now, that's just not realistic," Bailey said. "That's not how it works. Honestly, this hasn't even been a topic of conversation as we've been discussing pensions this year. I don't know where it came from."
Groups representing public workers say they have their own suspicions. One fear is that once the state government has created a new funding stream of roughly
There also is concern that lawmakers will try to quietly shift the money from retiree insurance funds toward pension funds, making it a "back door" violation of the state's inviolable contract that limits how much public employees can be asked to contribute toward pensions, said
"I'd like for our elected leaders to come out and clearly state a reason for this," Carroll said. "Most state employees haven't had a pay raise since 2007, not even counting the unpaid furloughs they've had to take. If they're supposed to take a pay cut now, someone needs to make the case for it."
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