House OKs Massive Borrowing To Shore Up Teachers' Retirement System
The state would borrow a record $3.3 billion to prop up the ailing teachers’ retirement system under a bill approved by the Democratic-led House Monday.
While the measure sailed with surprising ease through committee earlier this month, debate in the full chamber proved more pointed – with several members, including Rep. Brad Montell, painting a risky picture of the proposal, charging that it "will likely wipe out the state's capacity to issue bonds to finance new infrastructure for many years to come."
"We will, for all practical purposes, be locked out of the bond market," the Shelby County Republican warned.
But bill sponsor Greg Stumbo argued the pension system can borrow money at about 4.5 percent interest and earn 7.5 percent through investments, but the window of opportunity is short.
"Does it make better sense to have comfortable inaction?" the speaker asked. "Or does it make better sense... to take a course of action that I believe has minimal risk?"
The bill passed 62-31, sending the legislation down the hall to a more skeptical chamber. And while Stumbo has yet to discuss the bill with Republican Senate President Robert Stivers, he did offer this terse statement for his colleagues across the Capitol: "It's an obligation we have to pay. This is my solution. What's theirs?"
Shortfalls in the Kentucky Teachers’ Retirement System currently total more than $14 billion.