02/13/19 - Pension Update

Dear Colleagues:

This afternoon in Frankfort, Representative James Tipton filed the Higher Education Pension Reform bill in the Kentucky House of Representatives.

The consensus approach in this bill is exactly what we want and is aligned with the priorities we shared with you, the NKU community, during the Fall Forum in December 2018. It was developed in collaboration with colleagues from Eastern Kentucky University, the Kentucky Community & Technical College System, Kentucky State University, Morehead State University, Murray State University, Western Kentucky University and the Kentucky Higher Education Student Loan Corporation.

Our approach represents a shared responsibility between the institutions and KERS, and is focused on employees. Each employee in KERS would be able to decide what is in their best interest: to stay in the system or transfer to an alternative retirement plan. The bill is based on the successful efforts in the 2015 Indiana postsecondary pension reform bill and would provide financial stability for our long-term efforts.

The bill’s recommendations are as follows:

1. Place all new hires into a university-sponsored defined contribution system.
2. Create a one-time window of time for existing Kentucky Retirement System (KERS) employees to opt out of the KERS system and into a university-sponsored defined contribution plan.
3. Have an actuary determine the agency-specific unfunded liability for active employees, inactive employees and retirees.
4. Provide the option for agencies to have a set number of years to pay off unfunded liability through a level-dollar approach; thus, eliminating the percent of payroll contribution.
5. Freeze KERS contribution levels at the current rate of 49% from July 1, 2019, through July 1, 2020, and extend the freeze until an actuary has determined the liability to be paid by institutions electing to cease participation in KERS.

Now that the bill has been filed, there will be legislative hearings to discuss it and, ultimately, there will be a vote on the bill.

We are grateful to Rep. James A. Tipton for his leadership in filing the bill, and he has the full support of each of our campuses. We look forward to continued discussions with policymakers to gain support for this consensus bill. As we learn more information throughout the process, we will share those details with you.

Sincerely,
Ashish