As Gov. Matt Bevin mulls whether to call a special session to deal with the state’s ailing pension system and tax structure, a class action lawsuit brought against the state by aggrieved teacher pensioners continues to make its way through the court system.
The Teachers Retirement Legal Fund argues that state leaders have broken the law by not setting aside enough money for the Kentucky Teachers Retirement System, which manages the pensions of about 141,000 school system retirees.
Randy Wieck, a history teacher at DuPont Manual High School in Louisville, said that the state needs to come up with a way to fully fund its “actuarially required contribution”— the amount required for the state to adequately fund the pension system.
“The gas tax could be raised, there’s phone taxes, all kinds of user fees,” Wieck said. “They need to begin to honor the actuarially required contribution.”
Legislatures and governors have for nearly two decades signed off on budgets that set aside less money than necessary to keep the pension systems from losing money and selling off assets.
According to a recent Pew Charitable Trusts study, in 2015 KTRS had about 51 percent of the money it needed to write checks to retirees in the future. The fund for most state workers — Kentucky Retirement Systems non-hazardous — only had 23 percent.
The study ranked Kentucky’s as the second-worst funded pension systems in the country.
The lawsuit names Bevin, House Speaker Jeff Hoover and Senate President Robert Stivers as plaintiffs to the case.
In a recent court filing, the governor’s office said that Bevin “sympathizes with the plaintiffs,” but that the judiciary can’t order the state to fix the situation.
“If the Plaintiffs simply want a declaration that the Kentucky Teachers’ Retirement System (“KTRS”) faces an unfunded liability, Governor Bevin will confess judgment,” the governor’s motion states.
“But that is not what the Plaintiffs want; they want the judiciary to fix the KTRS. This, the judiciary cannot do. Fixing the KTRS is a matter that must be left to the political branches”
The lawsuit was originally filed in Franklin Circuit Court but has been transferred to the U.S. District Court for Eastern Kentucky.
In a recent court filing, the teachers argued that the state has breached its obligation to fund the teacher pension system.
“This is more than a ‘moral imperative,’” the teachers’ motion states. “The legislative branch and the executive branch have failed, year after year to adequately fund KTRS. It is time for the court to address these issues.”
Bevin says he plans to call lawmakers back to Frankfort this year for a special legislative session dealing with pension and tax issues.
Wieck, the teacher who filed the lawsuit, said he’s eager to hear solutions to the pension crisis.
“It’s going to take something to get this ball rolling,” Wieck said. “And the lawsuit is intended to get the attention and eventual action of the legislature and the governor. Because they sure weren’t doing anything up to this point.”