Pension Crowd

Teachers and community members gathered to ask Senator Stephen West about Governor Matt Bevin's proposed pension changes.

FLEMINGSBURG – Kentucky Sen. Stephen West waded into questions and concerns about Gov. Matt Bevin’s proposed pension plan Thursday in Flemingsburg.

Teachers from Mason and Fleming counties confronted West regarding concerns they had about the proposed bill.

Under the bill, current teachers have until 2023 to retire with the pension as it is now. New teachers would be entered into a 401A plan, nine percent of which would be paid by the teacher, six percent by the state government and two percent locally. The bill also presents several other changes that have some up in arms, including a change to sick day compensation and retiree subbing.

Changes to subbing state that a retired teacher could not substitute more than 100 days a year or they would lose their retirement compensation.

Changes to sick days include no longer going toward retirement benefits and a possibility of sick days being allotted by local school districts.

“We’ve got a big problem with our unfunded liabilities,” West told the crowd. “We have the worst funded pension system in the United States. Our credit rating has been downgraded two or three times recently. Basically, that means you’re paying more interest on everything you buy as a state.”

West said that hopefully getting the pension system stabilized will set everything straight for the bond rate in the future.

One question presented by a teacher asked for a list of other sources of revenue that could be used.

“Please, please, please tell me you’re not bringing in marijuana and gambling,” she said. “What are other things in the state so you don’t have to cut workers?”

West said that last time, the state government was cut by nine percent and universities were cut 4.5 percent, but said doing nothing was not an option.

“Let’s say we do nothing. In January, we will have to come up with $700 million to $1.2 billion in new dollars to fund two primary things – pension systems and medical care.” West said.

West said that Kentucky will start having to pay 10 percent of the Affordable Care Act next year, which he said will add $250 million to $300 million worth of new money the state will have to pay.

When asked why they don’t just keep enacting these cuts, West said that the cuts were “painful” and that it was a tough thing to do to universities and the state.

West also said gambling and recreational marijuana would not be a viable solution.

“Gambling, recreational marijuana and new taxes are sources of new revenue,” West said. “We’re not going to see any real revenue from those in a while. We need that revenue now. We are going to have to get that money from within state government, which includes education.”

West went on to say that he was pro-medicinal marijuana, but that recreational marijuana is a different story.

“There is revenue to be gained from recreational marijuana,” he said. “However, the important thing to remember is its still against federal law. These other states have been able to do that because they have a letter from the State Department stating ‘At this time, we are choosing not to prosecute.'”

West said that he worries that if it is enacted in the State of Kentucky and a new administration wants to crack down on such things, they could come in and “tear it all down.”

“I’m open to new revenue streams, but time is a constraint,” West said.

On cuts, West said he did not want to make any, but that the government will when they are forced to.

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“I think within the governor’s bill there is room for a compromise,” West said.

According to West, teachers would still not receive social security under the new 401A plan.

“Research was done for that option if it would be advantageous for the state and teachers to buy into the Social Security system,” West said. “When you ran the numbers, it was more advantageous to the state and to teachers to do a 401A instead of put teachers in Social Security.”

In response to a question about teachers being a scapegoat for the government’s issue and setting a precedent that could lead to further cuts to teachers, West said that everyone is making sacrifices.

“Other citizens would be contributing money to solve this problem,” West said. “They make contributions by the general fund. If we raise taxes, that would be another sacrifice from others.”

West said that he would not be opposed to a one percent increase in sales tax in Kentucky to help the problem, but said that it would not be able to fix the problem on its own.

As far as setting a precedent goes, West said that a good component of a 401A plan.

“That becomes your property,” West said. “That money belongs to you.”

West said he cannot guarantee what future legislatures will do, but he can promise to put things in statutes and make it available to read so that if future legislatures do change them, they would have to be transparent about it.

On his stance on the bill, West says he hadn’t made a decision.

“As of right now I make no decision whatsoever,” West said. “There’s no use tying your hands on something that doesn’t exist. As of right now, there is no bill before me in the Senate. Could I support something similar to what the Governor has proposed? Yes. With tweaks, yes. Is that what is going to come across my desk? At this point, who knows.”

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