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State Representative Upchurch and Senator Wise Visit County to Discuss Recent Legislation

Photo by Eugenia Jones
State Representative Ken Upchurch and Senator Max Wise spoke to constituents during the McCreary County Chamber of Commerce meeting held on Wednesday. Both answered questions regarding recent legislation including actions taken on pension reform and the new two year budget.

By Eugenia Jones
eugenia@highland.net

McCreary County’s Kentucky State Representative Kenneth Upchurch and State Senator Max Wise spoke to local residents during a well-attended McCreary County Chamber of Commerce meeting held earlier this month at the McCreary County Public Library. Providing information regarding actions taken during the recent 2018 legislative assembly, the two gave a detailed explanation of recent teacher retirement pension reform and fielded questions from the audience about a variety of topics including the completion of State HWY 92 from Pine Knot to Williamsburg. Both Upchurch and Wise expressed relief the highly contentious and controversial 2018 legislative assembly had ended.
“In my eighteen years of service, this has been the toughest and most contentious session,” Upchurch asserted. “We had three priorities. First, we had to deal with the pension issue. We had to develop a two year budget, and we had to come up with some tax reform. To squeeze all that into a sixty day session was tough.”
Senator Max Wise, who is chairman of the Senate Education Committee, echoed his colleague’s sentiments.
“I hope I never see another session like this for our state,” Wise remarked. “It was time to fix things, and we had to get it done. It’s easy to pass things off, but if you are going to do what’s right for your constituents, you have to fix the problems you inherit. A lot of what was accomplished during this session has been overshadowed by all the noise. It’s sad we have reached the point in our society where we can’t sit down and have a conversation without attacking each other. We need civil discourse. If we disagree about something, we need to be able to sit down and talk.”
Upchurch and Wise spoke in detail about the teacher retirement pension reform bill signed into law during the 2018 session and shared details about the newly enacted 2018-2020 state budget as it relates to teacher retirement and funding for public education. State-wide and locally, teacher pension reform and funding for public education were hotly debated issues eventually leading to the cancellation of classes giving teachers the opportunity to protest in Frankfort while legislators were in session.
Upchurch noted his own sense of urgency in passing teacher pension reform during the 2018 legislative assembly.
“Over the past few years, it has been frustrating to be in the minority and not be able to do anything as we watched the teacher pension system go deeper and deeper into debt,” Upchurch commented. “Now that we have a Republican majority, we had to take action. We really had no choice if retirement checks were going to continue.”
With the current teacher retirement pension system underfunded by 43 billion dollars, Upchurch noted that although state has always paid the required contribution of 13.105% to the teacher pension system; it has not always paid the actuarially required contribution (ARC) which is an amount, typically above and beyond, that should be contributed in order to cover current costs and pay down unfunded liability. The ARC is not required by statute. Upchurch said legislators recognized a structural problem existing within the current teacher pension system when they realized the system would still have been underfunded by 36 billion dollars even if the actuarially required contribution amount had always been paid in full.
“When you combine a serious structural problem with the fact people are living longer and retiring younger, it means something has to be done,” Upchurch remarked. “We either had to fix the system or let retirement checks stop.”
Upchurch and Wise referenced an early PFM consulting report recommending drastic and immediate pension reform.
“The PFM report told us how to get from point A to point B in fixing the teacher pension system,” Upchurch said. “However, that report and an earlier Senate Bill (SB)-Senate Bill 1-failed to look at the human element by not considering immediate and future ramifications on current teachers and retirees. We also knew promises had been made to teachers, and those promises needed to be kept. To not look at the human element of reform was unacceptable to us. There need to be compromise.”
Ultimately, Upchurch and Wise both voted in favor of compromise in the form of SB 151-the teacher pension reform legislation eventually signed into law by the Governor.
“With SB 151, we got rid of unacceptable parts of the PFM report and SB 1,” Upchurch explained. “By basically not changing the defined benefit system for current teachers and retirees and allowing them to stay in that system, we honored the promises made to teachers in the past. At the same time, we began the process of getting the pension system back on a sustainable path by putting new hires in an attractive hybrid cash pension system. With an 18% contribution rate, new teachers entering the hybrid cash system are guaranteed not to lose money and keep 85% on investment gains. The remaining 15% of investment gains will return to the state to be used to help pay off the underfunded defined benefit system left in place as promised for current teachers and retirees. The hybrid cash benefit for new teachers is a portable system so teachers can transfer their investments if desired. I think it is a very attractive pension plan, and by moving future teachers into a new, more sustainable system, we will be able to manage the unfunded liability of the current defined benefit system and pay it off over coming years.”
Upchurch and Wise noted that, unlike SB 1 and the Governor’s original proposal, SB 151 strives to protect and preserve previously promised benefits for current teachers and retirees by preserving their current defined benefit plan throughout their careers and protecting cost-of-living adjustments. The bill also preserves state provided life insurance for all current active and retired teachers, preserves the law requiring districts to provide teachers a minimum of ten sick days per year, allows rollover of sick days from year to year, and protects against a pension board composed completely of political appointees and hires of the Governor. SB 151 permanently preserves the use of currently earned sick days for pension calculations; however, it does not allow continued accrual of sick days for pension calculations for current active or future teachers. Upchurch pointed out that the change disallowing accrual of future sick days for pension calculation is viewed as acceptable by the Kentucky Education Association.
“There are ways to save money, but there are also ways to listen to constituents and do what is right,” Representative Upchurch emphasized.
“We could have fixed the system more, but promises had been made to current retirees and teachers,” Senator Wise added. “We didn’t want to go back on those promises.

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