Tag: House Bill 4

Kentucky Pension Bond Bill Rejected, Amended in Senate

kentucky

The Kentucky Senate has rejected a bill that sought to issue $3.3 billion in bonds to help ease the funding shortfall of the Kentucky Teachers’ Retirement system (KTRS).

The bill passed the House late last month, but was stopped short in the Senate on Monday.

Some lawmakers cited the risk of the bonds as a reason for the bill’s rejection; the success of the plan depended on the system’s investment returns exceeding the interest on the issued bonds.

If that were to happen, KTRS could pocket the difference and funding will improve. But if investment returns lag, the pension-funding situation would worsen further.

Senators amended the bill to call for the creation of a task force to examine the pension system and recommend funding solutions.

More on the new bill, from the State-Journal:

The substitute adopted in the Senate Standing Committee on State and Local Government instead directs the Legislative Research Commission to create a Kentucky Teachers’ Retirement System task force to study and make recommendations for funding and stabilizing the retirement system.

The task force will include:

* Six members of the Senate with four appointed by the Senate president, two appointed by the Senate minority floor leader;

* Six members of the House with four appointed by the House speaker, two appointed by the House minority floor leader;

* The House speaker and Senate president will each appoint one co-chair from their chambers;

* The task force will have monthly meetings during the interim and report its findings to the LRC for referral to a committee by Dec. 18, 2015.

The bill is officially called House Bill 4.

 

Photo credit: “Ky With HP Background” by Original uploader was HiB2Bornot2B at en.wikipedia – Transferred from en.wikipedia; transfer was stated to be made by User:Vini 175.. Licensed under CC BY-SA 2.5 via Wikimedia Commons 

Kentucky Teachers’ Pension Bond Proposal Clears House Committee; Vote Could Come Next Week

Kentucky

Legislation is moving forward that would let the Kentucky Teachers Retirement System (KTRS) issue $3.3 billion in bonds to help ease the system’s funding shortfall.

On Tuesday, the bill cleared Kentucky’s House Budget Committee without any opposition.

The bill’s sponsor, House Speaker Greg Stumbo, said a House vote could be coming as soon as next week.

If passed, the plan’s success hinges on KTRS investment returns exceeding the interest on the issued bonds.

More from the Courier-Journal:

Without a clear plan to ante up more money, lawmakers on the powerful House Budget Committee are backing legislation that would let KTRS issue $3.3 billion in bonds to prop up its investments over the next eight years.

[…]

If approved, KTRS would issue the bonds in fiscal year 2016. Pension officials estimate that they can borrow money at 4.5 percent interest and earn returns of 7.5 percent through investments. The plan also calls on the state to begin gradually increasing contributions in the next budget cycle.

All together, that would cut the state’s annual retirement contribution in half — from more than $800 million each year to about $400 million a year — by 2026.

KTRS says it can cover the costs by reshuffling finances for certain benefits and by reappropriating debt service that’s already in the state budget and slated to retire.

Stumbo says he traditionally opposes pension bonds but argued Tuesday that the state could capitalize on interest rates, which have dropped to 50-year lows. “That makes this window of opportunity that we have so attractive,” he said.

The measure is officially called House Bill 4.