Kentucky Teachers ‘Outraged’ At Thought Of Accepting Same Retirement Plans As Private Sector Workers
Posted by Tyler Durden on October 26, 2017 12:00 am
Tags: 401, Defined benefit pension plan, Defined contribution plan, Economy, Finance, General Assembly, Investment, Labor, MONEY, Pensions, Recession, Retirement, Retirement plans in the United States, Social Issues, Social law, Taxation in the United States
Categories: 401 Defined benefit pension plan Defined contribution plan Economy Finance General Assembly Investment Labor money Pensions Recession Retirement Retirement plans in the United States Social Issues Social law Taxation in the United States
Last week we noted that, after months of planning and cogitating over how to address the failing public pension systems in their state which are somewhere between $40 and $80 billion under water, Kentucky’s Governor Matt Bevin and the leaders of the General Assembly’s Republican majorities released their highly-anticipated ‘plan’ which turned out to be nothing more than the same old “kick the can down the road” approach to “pension reform” that has perpetuated the pension ponzi in this country for decades while doing absolutely nothing to address the actual crisis.
Here is a summary of the ‘plan’ courtesy of the Courier-Journal…notice that aside from putting new teachers into a “401(k)-style” defined contribution plan, the Republican proposal does pretty much nothing else except demand that more taxpayer dollars be diverted to service failing pension plans.
Here are highlights of the multi-point proposal:
- There is no increase in the full retirement age for current workers
- There will be no reductions in pension checks for retirees, and it protects health care benefits for them.
- Future non-hazardous employees and teachers will be required to enroll in 401(k)-style plans.
- Hazardous duty employees, such as police officers and firefighters, will continue in the same system they are in now.
- The plan would close a loophole to ensure payment of death benefits to families of hazardous employees.
- The plan would stop the defined benefits plans for all legislators, moving them into the same plan as other state employees under the jurisdiction of Kentucky Retirement Systems.
Of course, you can imagine our ‘surprise’ when we learned that Kentucky teachers are apparently outraged that they might be ‘forced’ to live with the cruel and unusual punishment of having to accept the same 401(k)-style retirement plans as pretty much every other private-sector employee in the country…the horror!
In an op-ed published in the Lexington Herald Leader this morning, a trio of public school administrators blasted the notion that they would be required to bear some responsibility for managing their own retirement plans rather than simply sticking their hand out for more taxpayer funded gifts when their public pension ponzis run low on funds.
However, we are seriously concerned that proposals in the current framework would increase the cost of the system, increase financial burdens on our local communities, decrease retirement security for our teachers and staff while moving absolutely all risk to them, and, most troubling, increase the unconscionable student resource inequities among classrooms across the state. It would decrease benefits for retirees, current staff and future hires, and increase revenue only from our employees themselves and from our local communities. We fear it would result in damage to public education on which families depend.
The proposed framework would create a defined-contribution plan with no amount of protected benefit whatsoever, which would be expensive in the near-term from a contribution standpoint and could leave employees with absolutely no savings or retirement income if another recession occurred as they neared retirement. This lack of financial security, which virtually no private or public sector employee faces, will decimate staff recruitment; students will suffer from increased class sizes and lack of specialized educators. It is difficult to imagine many of our finest young people choosing to enter a field of work that presented such risks.
An essential way to evaluate any reform is for each of us to ask ourselves this: Under the proposed plan, would we proudly encourage our own daughters and sons to earn college degrees and enter the education professions? Or, would we instead tell our own kids that serving their fellow Kentuckians by teaching children to read and write won’t provide a safe, secure future, and urge them to consider other options?
The problem, as we’ve noted numerous times before, is that the aggregate underfunded liability of pensions in states like Kentucky have become so incredibly large that massive increases in annual contributions, courtesy of taxpayers, can’t possibly offset liability growth and annual payouts…a fact that teachers seem all to happy to ignore.
Of course, if teachers are truly just concerned about providing the ‘best education possible’ for public school students…how about a compromise? We’re almost certain that taxpayers would be more willing to fund your extravagant pensions if you would, in return, be willing to be evaluated, and potentially fired, based on performance metrics assessing the relative improvement of your students and therefore your effectiveness as a teacher…deal?