Kentucky House Speaker Greg Stumbo says he is planning on filing a bill by the end of the week that would give additional funding to the state’s Teacher Retirement System.
The funding would come through bond sales and could lead to an infusion of nearly $1 billion into the teachers’ system.
The funding would likely keep the pension system solvent for a few more years – meaning, the system could pay out benefits without having to sell off assets.
Not all lawmakers are on board with the idea of issuing bonds to pay down pension debt. But Stumbo says the time is now.
From the Courier-Journal:
Stumbo, D-Prestonsburg, said authorizing bonds would allow the system to capitalize on historically low borrowing rates and refinance its pension debt. He compared it to refinancing a home mortgage.
“I don’t generally favor bonding these pension obligations, but since the market is so favorable, it would be irresponsible for us not to at least consider what they proposed,” he said.
Stumbo said Thursday that the bill remains under review by pension officials but that he expects to file legislation within the next day.
The Kentucky Teachers Retirement System (KTRS), for its part, has made two proposals to lawmakers regarding the funding of the system. One would fund the system until 2019; the other would fund the system until 2023. Details:
KTRS has proposed two options for lawmakers to consider in the 2015 legislative session.
One involves a $1.9 billion bond issue to help fully fund teacher pensions for the next four years and eventually decrease annual pension costs by about $500 million by fiscal year 2026.
A second option for $3.3 billion in bonds could fully fund the system for eight years and save around $445 million annually by 2026.
The Kentucky Teacher Retirement System has $14 billion in unfunded liabilities.
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