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Take Back Kentucky Legislative Alert

Oppose: House Bill 1: Debt Financing Teachers Pensions

3/14/2016

Call 1-800-372-7181

Sponsor(s):                 G. Stumbo, L. Belcher, M. Denham, J. Jenkins, M. Marzian, R. Meyer, C. Miller, R. Smart, D. Watkins, B. Yonts

Status:                      

  • Jan 06, 2016 – introduced in House
  • Jan 07, 2016 – to Appropriations & Revenue (H)
  • Feb 29, 2016 – posted in committee
  • Mar 08, 2016 – reported favorably, 1st reading, to Calendar
  • Mar 09, 2016 – 2nd reading, to Rules
  • Mar 10, 2016 – recommitted to Appropriations & Revenue (H)

Committee:                House Appropriations and Revenue

Timeframe:                 Committee meets every Tuesday @ 10AM in Annex Room 154

Message is for:           All House Leadership, Members of the House Appropriations and Revenue Committee, and YOUR Representative

Message:                     “Oppose House Bill 1, No more Debt Financing, Cut Spending instead”

Optional:                    E-mail the legislators on the committee. Example e-mail address: Firstname.Lastname@lrc.ky.gov . If that doesn’t work they have a contact page on their informational page.

Information:               We all like our teachers and agree they should have a fully funded pension after years of hard work and service to our children, but debt financing their pension to the tune of $3 BILLION is not the answer. We are just kicking the can down the road will cause worse economic problems for Kentucky later. What the legislature needs to do is pass a budget that cuts spending and finds ways to raise revenue without increasing tax rates, but by attracting more business to Kentucky.

 

 

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3 Responses to “Oppose HB 1 – $3 Billion in Debt Financing for Teachers Pensions”

  1. Virginia Smith says:

    I’m sure I probably don’t understand enough about the whole problem with funding the teacher’s retirement and imagine that those who oppose funding their retirement will mean that there will be opposition to funding KRS as well. You have said that funding KTRS would just be kicking the can down the road and maybe that is so but WHEN is the time to find these systems? How much worse can the funds get before it is bankrupt and those of us who paid our part and based our retirement years on the agreement we entered into have no income? In my household my busband’s Teamster retirement is being cut in half this year. I know that if my pension gets cut also that we will not be able to live in our home and if the economy gets worse (as it will) if state retirees lose their pensions there will be no market to sell our home. What would you advise us to do NOW to prepare? Thank you

  2. Bill says:

    We are not saying the pension should not be funded, in fact we say in our alert that is should be. What this is is debt financing. Debt Financing is not funding it, it is borrowing from Peter to pay Paul. What we propose is to cut items from the budget and fund things that should be. Right now the KTRS pension system is actually the best funded pension compared to all the other state pensions, with the exception of the legislators own pension system (imagine that!). Further by doing this it is going to make it a lot harder to pay the other pensions to other state employees because Kentucky is going to have to pay the interest on this loan as well. $3 Billion dollars is probably going to turn into $5 Billion at least that needs to be paid, so the others will wind up $2 Billion short. If you are asking what we think the government should do, its cut spending and reallocate resources to the essentials. If you are asking what you should do personally we can’t give you that answer everyone’s situation is different, but accelerate savings and investments might be a good place to start…..at the end we are not sure any pension is going to ever get fully funded if the government keeps doing what its doing. However, we shall see what our new Governor’s plan will be like tomorrow at the Budget Address to the Commonwealth.

  3. Quincy says:

    It never ceases to amaze me how otherwise intelligent people can be totally oblivious what’s happening here in the US. Ladies and gentlemen, what you’re witnessing is a Marxist takeover. Doubt what I say? Go bone up on how Russia was overthrown in their revolution.

    They first had to wreck the Russian economy which, with the crushing cost of WWI, was fairly easy to do especially with the aid of labor unions who shut down the manufacturing sector of the Russian economy.

    The Russian military was in disarray with desertions at over 50% in some units. Communist agitators within the ranks soon had what was left of the military in revolt. Which meant that the Russian government was, for the most part, helpless to resist the communists as factions within the military fought themselves.

    After fifteen years of war and banker bailouts approaching a trillion dollars we now have a national debt that can never be repaid. Ever! Washington is looking for any pretext to begin a gun round up. We have more people on public assistance than who work (not to mention that fewer workers translates into higher taxes for those who do work). Not saying that because you’re on public assistance you’re automatically a bum but does that matter to the bottom line?

    As states and cities struggle with budget shortfalls things will only get worse. What Stumbo and his ilk are proposing to do is to put Kentucky taxpayers on the hook (our taxes guarantee the loan) for loan repayment if the pension fund fails. With pension funds (even yours) invested heavily in the stock market ROI has to remain above a certain level or everybody takes a haircut with their retirement money which is why the idiots want to borrow money, the fund is approaching the point it can no longer maintain the current and projected distributions.

    When the fund managers go to the state and announce that they can no longer pay out at current levels some things will start happening automatically. Most likely the courts will step in and to prevent the fund from bleeding dry order benefits reduced and assets frozen until the state comes up with a plan to make the fund solvent again or it becomes apparent that there is no hope of that happening in which case the assets will be liquidated and whatever is left is parlayed out to investors in the fund at pennies on the dollar. My sister is a retired school teacher and I warned her over five years ago to expect a haircut. When she asked how bad it would be I told her (I am no actuary) my best guess would be that she’d be lucky to see twenty cents on the dollar.

    The bet that the stock market will turn around and we’ll all be singing Happy Days are Here Again is a fools bet. I used to trade the market but I pulled out last year and moved into metals. The stock market will crash and from the looks of things this year. Hopefully before Stumbo gets his loan.

    It may seem hardhearted to propose that we let nature run its course and allow the pension fund to fail but to borrow three billion dollars to add to the losses of the fund is simply INSANE. At some point, with or without Stumbo’s three billion, the fund will become insolvent and fail. Which means that the fund will not only be a loss for the state the loan is still owed and could very easily be the next in line for default.

    States don’t have the option of raising the debt ceiling like the Federal government does. States have no access to the printing press at the Treasury. In the past ten years we’ve seen large metropolitan cites default and some counties too. If you think it can’t happen to a state I would only ask that you stay tuned. Keep your eyes on California and then watch the dominoes tumble.

    I’d like to know exactly how many different pension schemes state and local governments have in play right now. Because each and everyone looks at their pension as more sacred than all others they will most assuredly squall to high heaven for Frankfort to bail them out when their turn comes to fail. How do you think Frankfort will triage who gets help and who can go fish? Police unions (they have guns and know how to use them) or highway workers (they can block roads and bugger traffic signals) or prison guards (they could turn all the scum loose on us), get the picture- in short it will look like Russia 1917.

    Lady, I don’t want to make light of your situation. But, you’re not alone. I raced to get my money out of a 401K before it evaporated because I saw the writing on the wall. I warned others but they thought I was a kook and they got clobbered. I’ve been following this for a long time and I think I have a handle on a lot of it. Nothing is going to save your retirement or anyone else’ for that matter. The best you can do is do what you can to save yourself. We invested in gold and silver (do not construe this as investment advice). When the market goes a chain reaction will start and we could see the value of our money drop like a rock. Toss in Yellen’s printing press and hyperinflation could make the US economy look like Zimbabwe’s. When bread goes to twenty bucks a loaf what do you think will have happened to the price of silver? Don’t look at the metals as an investment per se. Look at metals as a way to hold onto some of what you have in a worst case scenario.

    I agree with Bill above. The only sane way to deal with this pension fund problem is to take an axe to the budget and mandate that everything cut goes toward the pension. That does more to protect you and others like you more than you realize at the moment. The proverbial penny saved idea.

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