Kentucky House Speaker: Let Teachers' Retirement System Issue $3.3 Billion in Bonds
FRANKFORT — Kentucky's state-funded teacher pensions are in a $14 billion hole, and House Speaker Greg Stumbo says he may have a solution.
Stumbo said the state could re-invest in the underfunded Kentucky Teacher Retirement System by allowing KTRS to issue $3.3 billion worth of bonds.
On Friday, he filed a bill that would do exactly that, a measure he said would allow KTRS to take advantage of current 5 percent federal interest rates.
"The window of opportunity that exists to issue these bonds is limited because it's the rate that's what makes it attractive," Stumbo said.
Stumbo also said that when it comes to bonding pension debt, he wants to see a greater amount of transparency in the process.
"When you talk about pension reform, whether its allowing the opportunity to bond some of this unfunded liability, that you have to couple that with a realistic look at reform going forward as we did with KERS," Stumbo said, referring to the Kentucky Employees Retirement System.
"So yes, I think that has to be part of the discussion. I personally believe that there can;t be enough oversight, or enough transparency."
Right now, KTRS only has enough money to pay out 54 percent of future benefits to retiring teachers. If passed, the bill could allow KTRS to issue as much as $3.3 billion in bonds, a move they say would fund their pensions for eight years.
Stumbo's bill will be sent to a committee when the legislature convenes on Feb. 3 for Part II of the 2015 session.