Superintendent applauds Rep. Kay for highlighting the "very large assumptions" in infographic highlighting Franklin Co. teachers
The State Journal, Nov. 3, 2017
PENSION CRISIS: Teacher benefits at center of debate
Franklin Co. educators highlighted in infographic
By Alfred Miller
Franklin County teachers again figured prominently in the debate over public pension reform on Wednesday — this time, in an infographic published by Gov. Matt Bevin’s office and debated at the most recent Public Pension Oversight Board meeting.
The infographic uses the Franklin County Schools salary schedule, which starts at $42,407 for a rank two teacher with no experience, to estimate that a 401(a) defined contribution plan would leave a teacher “wealthier at retirement than if they began in the defined benefits plan currently in law,” stated a press release Bevin’s office published on Monday.
“The estimate shows that a new teacher starting at age 24 and working until age 61 will start retirement with $1.59 million,” the press release said. “If reinvested, this could translate into a payout of $5,400 per month with a yearly increase of 1.4 percent for inflation. This will also leave $876,000 for the teacher to pass on to family or charity. In contrast, the same teacher retiring at 37 years and enrolled in the defined benefit plan currently in place would receive approximately $5,400 per month for life with no benefit to pass on to family or charity.”
Kentucky Education Association President Stephanie Winkler isn’t convinced by the infographic.
“To put something out there that says, ‘If you choose this plan, you’ll have $1 million and if you choose this, you’ll only have $5,400 per month,’ that’s not right,” Winkler told The State Journal. “Most people will not even reach a $42,000 salary for a long time.”
Franklin County Schools ranked 90 out of 173 districts statewide with an average teacher salary of $48,873 during the 2015-16 school year.
“That graphic also assumed someone would teach for 37 years,” Winkler said. “Most people right now don’t teach that many years.”
Winkler also pointed to the fact that the spouses of teachers who die before retirement are eligible to receive some survivor benefits.
“I would hope that after 37 years you’d have a pretty well-funded retirement,” FCS Superintendent Mark Kopp told The State Journal. Kopp said he also thought the infographic made some “very large assumptions,” but he applauded state Rep. James Kay, D-Versailles, for highlighting them.
During Wednesday’s Public Pension Oversight Board meeting, Kay noted that Deputy Secretary of the Finance and Administration Cabinet Mark Bunning, who came to explain the infographic’s assumptions, was using a 7.5 percent rate of return that was much higher than the 3 percent rate of return for 30-year U.S. Treasury Bonds. Earlier in the presentation, the return on U.S. Treasuries had been to illustrate that the public pension systems’ unfunded liability could be as large as $80 billion.
“It’s just a measure to look at the difference,” Bunning said.
“Right, I was measuring as well,” said Kay. “Thank you.”
“If we’re going to use the numbers to inflate the crisis, I don’t think it’s fair to use rosy statistics to sell the new plan,” Kay told The State Journal. “We need to remain realistic — we need to be conservative — but we don’t need to be inflating things to where they have no basis in reality.”