1. CUTTING KEEPING THE PROMISE PENSION SYSTEM CRISIS
“If you are a retiree, if you are working to be a retiree at some point, you should be rejoicing.”
- Governor Matt Bevin

2. Pension History Where we are now.
Governor Bevin’s pension proposal unveiled on October 18, Draft Bill Released Oct. 27th
Effects both Classified and Certified retirement plans.

3. County Employee Retirement Systems - CERS
This includes all Classified Staff.
School employees including: instructional assistants,
office staff, custodians, school food services,
maintenance, all transportation staff, etc.

4. Which Tier are you in? Tier 1: participation before September 1, 2008
DEFINED BENEFIT PLAN (DB)
Tier 2: participation Sept. 1, 2008 through Dec. 31, 2013.
Tier 3: participation on or after January 1, 2014
DEFINED CONTRIBUTION PLAN (DC)

5. Tier 1 and Tier 2 employees will be able to accrue (receive) full unreduced retirement eligibility with the current Defined Benefit (DB) plan based on each Tier’s eligibility requirements
Tier 1: 27 years of services OR age 65 (with 48 months of service)
Tier 2: Rule of 87 (member’s age(min age=57) & years of service equal 87) OR age 65 with at least 60 months of service
NOTE: If Tier 1 and Tier 2 employees are still working at their above applicable threshold service combination, they’ll automatically move into Defined Contribution plan. (i.e. 401A)

6. Account balances in the Defined Benefit plan for Tier 1 and Tier 2 will not be lost once the employees move to the Defined Contribution plan. They can draw from their DB plan when they retire plus from the DC plan.
Tier 3 employees will immediately rollover into a defined contribution program (i.e. 401A) on July 1, 2018.
This new program is called the
Pubic Employees Retirement Plan (PERS).

7. NOTEWORTHY POINTS OF CONCERN
Retirement calculations require “High 5” years to be a full 60 months of service. (Full year = a minimum of 180 contract days)
Effective July 1, 2018 all new employees will automatically begin contributing to the defined contribution (i.e. 401A) program
Effective July 1, 2018 all classified employees will have additional 3% deducted from their payroll to help fund the retiree healthcare program
Effective July 1, 2018 all Tier 3 classified employees and those hired after July 1, 2018 will not be eligible to receive health insurance benefits until they are 59 ½ years of age and are drawing a benefit from PERS.
Classified employees will continue to pay into Social Security

8. OTHER NOTEWORTHY POINTS
Life and Disability Insurance are optional benefits in the PERS (401A) system.
Tier 3 employees and new hires will be unable to draw benefits from PERS until they reach age 59 ½ or 60 years old with 5 years of service credit.
Tier 1 & 2 employees Sick Leave will be capped at 6 months for retirement purposes as of June 30, This accumulated sick time can be retained and used as “service credit” toward retirement. (Note: The bill is not clear on this point.)
Sick Leave cannot be used for Service Credit for any Tier 3 or new hires.
Local Board of Education May reduce the number of Sick Days allocated each year. Previous statute established this at 10 days.
Local employers may still payout 30% for unused accumulated Sick Leave.

9. Employee 5% 8% 6% 9% Employee Proposed Contribution**
Current Employee Contribution – as a % of Salary
Employee Proposed Contribution**
Tier 1 – hired before Sept 1, 2008 5% 8%
Tier 2 – hired on/after Sept 1, 2008, and before Jan. 1, 2014 6% 9%
Tier 3 – hired on/after Jan. 1, 2014
Currently, employers (Local Governments, Board of Ed, etc.) contribute 19.18% to the Retirement Allowance Account and Insurance Fund. In addition, 6.2% is contributed to Social Security on behalf of the employee by the local employer.
The 19.18% for local Governments will increase with this plan! Because of the “Level Dollar” clause.

10. Immediate Concerns Mass Exodus at 27 years of service.
Retention & Recruitment of new employees.
3% Employee Contribution toward “Health Insurance Benefit”.
Completely breaks the promise to all Tier 3 employees.
No Disability Insurance provided for Tier 3 or new hires.
CERS is over 60% funded and the state is not contributing to this system, but governed under KRS.

11. Impact on public education.
Potential rally in Frankfort.
Absolutely CRITICAL for ALL employees to and call their legislators.
Must be a combined effort of Classified and Certified employees.
Make multiple contacts. Once is NOT enough.

12. Talking Points… Fund the current TRS and CERS programs.
No 401A plans for any school employee. Consider alternate Proposals!!!
Changing the Retirement Systems will create a mass shortage of school employees.
Educational advancements made over the last several years will greatly suffer.
This proposed plan will have a negative financial impact on school districts, school employees, local communities and the state of Kentucky.
All Kentucky school employees will be monitoring your actions and counting on you to do the right thing for us and the students of Kentucky.

13. CUTTING KEEPING THE PROMISE PENSION SYSTEM CRISIS
“If you are a retiree, if you are working to be a retiree at some point, you should be rejoicing.”
- Governor Matt Bevin

14. Pension History Where we are now. Governor Bevin’s pension proposal—
Unveiled on October 18, 2017
Draft Bill Released October 27, 2017
Effects both Classified and Certified retirement plans.

15. Certified staff who will have 27 years OR age 60 & 5 years service for the 2017-18 school year
Allowed to have 3 additional years, beginning July 1, 2018 in the current Teachers’ Retirement System OR
You may choose to enroll in to a 401A Defined Contribution plan as of 7/1/2018.
Will be able to count 30% of the value of your accumulated sick days to aid in your retirement benefits plan if retiring by July 1, 2021.
You will be allowed to use the “High 3” salary years for your retirement calculation, if you have 27 years and are age 55 or above.

16. Teachers who will meet the threshold
(27 years) by 2023
Allowed to stay in TRS.
Will be able to count 30% of the value of your accumulated sick days to aid in your retirement benefits plan until July 1, 2023.
You will be forced to leave TRS on 7/1/2023.
Any years teaching after 7/1/2023 will be enrolled in a 401A plan.
You will not lose the 27 years in TRS if you continue teaching after 7/1/2023.
You will be allowed to use the “High 3” salary years for your retirement calculation, if you have 27 years and are age 55 or above.

17. Certified employees with between 1-21 years of service after 6/30/2018
Allowed to stay in TRS, until they complete 27 years of service.
Will NOT be able to count 30% of the value of your accumulate sick days to aid in your retirement benefits plan.
Any years teaching after 27 years of service will be enrolled in a 401A plan.
The “High 5” salary years will be used for your retirement calculation.

18. Teachers hired as of July 1, 2018
NOT allowed to enter into TRS.
Will be placed into a 401A plan - Public Employees Retirement System (PERS).
Will NOT be able to count 30% of the value of your accumulated sick days to aid in your retirement benefits plan.

19. Cost of Living Adjustment (COLA)
As of July 1, 2018 all certified employees will have 3% of their salary taken as additional funding for the retiree healthcare program
Cost of Living Adjustment (COLA)
Current retirees COLA are temporarily suspended for the next 5 years as of July 1, 2018.
Future retirees will not get a COLA until they’ve been retired 5 years.

20. Future retirees (on or after July 1, 2018) will be required to suspend their pension in order to accept a full-time position, in the public sector, for the duration of their reemployment
*Full-time refers to more than 100 days worked per calendar or fiscal year.

21. How Does This New Proposed Plan Effect You?
If you have 20 years Experience or Less…
You can work up to 27 years, but will be under NEW Public Employees Retirement System (PERS).
After 27 years you can still retire under the NEW PERS system.
Cannot include accumulated sick days.
Retirement income MUST BE factored based on high 5 average only.
Local Boards may reduce the number of sick days allocated each year below 10. Also, boards do not have to accept accumulated sick days between districts.

22. Proposed New Retirement System Current Retirement System Benefits
Example:
A Rank II teacher retires at the age of 50 with 27 years experience and has half of their sick days saved (178 days). Using current salary scale it works out as...
For this teacher
Proposed New Retirement System
Current Retirement System Benefits
Salary Figure Based On…
Average of highest 5 years pay
Sick Days Added
No (not an option)
Yes
Yearly Retirement Income
$38,240.37
$40,416.30
Monthly Income
$3,186.69
$3,368.02
The Difference You Receive Under Current Defined Benefits Retirement Plan
Monthly: $181.33
Yearly: $2,175.96
Average Lifetime of 75 years: $54,399

23. Average Lifetime of 75 years: $291,414.20
Example: A Rank II teacher continues teaching until the age of 55, giving them 32 years of experience and still has half their sick days remaining (208 days). Using the current salary scale it works out as...
For this teacher
Under Proposed New Retirement System
Under Current Retirement System Benefits ONLY
Salary Figure Based On…
Average of highest 5 years pay.
At Year 28 had to move to 401A
Average of highest 3 years pay
Sick Days Added
No (not an option)
Yes
Yearly Retirement Income
$38,240.37
$52,811.08
Monthly Income
$3,186.69
$4,400.92
The Difference You Receive Under Current Defined Benefits Retirement Plan
Monthly: $1,214.23
Yearly: $14,470.71
Average Lifetime of 75 years: $291,414.20

24. Current Defined Benefits Plan
Let’s Look At It Side by Side
Proposed
New TRS plan
Current Defined Benefits Plan
Retire at…
27 Years at age 50
32 Years at age 55
Salary Figure Based On…
5 year high average
3 year high average
Sick Days Included
No (no longer option)
Yes
(half 178)
(half 208)
Yearly Retire Income
$38,240.37
$40,416.30
$52,811.08
Monthly Retired Income
$3,186.69
$3,368.02
$4,400.92

25. So what do you have to lose? Current Defined Benefits Plan Options
Proposed New
TRS plan
Current Defined Benefits Plan Options
Retire at…
27 Years at age 50
(half sick days included)
32 Years at age 55
Difference Monthly
----
+ $181.33
+ $1,214.23
Difference Yearly
+ $
+ $14,470.71
Difference accumulated to Age 75
+ $54,399.00
+291,414.20

26. What will this look like based on current salary schedule?
But that’s not all…
Under the “New Proposal” starting July 1,2018 all employees will be required to add 3% of their salary to fund the retiree health care program.
What will this look like based on current salary schedule?
Rank 3 teacher with 1 year Experience Will Pay $1, yearly out of their check.
Rank 2 teacher with 4 year Experience Will Pay $1, yearly out of their check.
Rank 2 teacher with 10 year Experience Will Pay $1, yearly out of their check.
Rank 1 teacher with 15 year Experience Will Pay $1, yearly out of their check.
This means it will cost everyone, no matter their experience, at least $100 a month out of their check.

27. Immediate Concerns
Mass Exodus at 27 years of service and the dates July 1, 2021 & July 2023.
Retention & Recruitment of new employees.
3% Employee Contribution toward “Health Insurance Benefit”.
Breaks the inviolable contract with 27 year cap, COLA suspension, cap on max compensation that can be drawn
No Disability Insurance provided.
Future Litigation is inevitable (Cap of 27 years, Sick Days, COLA suspension, etc.

28. Impact on public education.
Potential rally in Frankfort.
Absolutely CRITICAL for ALL employees to and call their legislators.
Must be a combined effort of Classified and Certified employees.
Make multiple contacts. Once is NOT enough.

29. Talking Points… Avoid the future litigation with Gov. Bevin’s Plan
No 401A plans for any school employee. Consider Alternate Proposals!!
Shared Responsibility Approach circulating being supported by K-Groups
Changing the Retirement Systems will create a mass shortage of school employees.
Educational advancements made over the last several years will greatly suffer.
This proposed plan will have a negative financial impact on school districts, school employees, local communities and the state of Kentucky.
All Kentucky school employees will be monitoring your actions and counting on you to do the right thing for us and the students of Kentucky.