Kentucky public school teachers filed a class-action lawsuit Tuesday against the governor and state legislators alleging that they illegally underfunded the $17.5 billion Kentucky Teachers' Retirement System, Frankfort.
The lawsuit, filed in Franklin Circuit Court in Frankfort, alleges that inadequate state contributions contributed to KTRS' roughly $25 billion in unfunded liabilities, violating parts of the U.S. and Kentucky constitutions and Kentucky's revised state statutes, said Theodore Lavit, attorney for the plaintiffs.
The alleged underfunding violated a contractual obligation and has been ongoing for at least eight to nine years, said Randolph Wieck, one of the plaintiffs. KTRS disclosed a funded status of 54.6% as of June 30, which is expected to be closer to 41% under new GASB 67 standards, he added.
Although a budget bill signed by Gov. Matt Bevin in April included about $498.5 million more in pension contributions to KTRS in fiscal year 2017 and $474.7 million in fiscal year 2018, the amounts fall slightly short of KTRS' actuarially required contribution rate and borrow from a public employee health insurance trust fund. Mr. Bevin took office in 2016.
Amanda Stamper, a spokeswoman for Mr. Bevin, said in an e-mail: “Reforming the state's ailing pension systems, both for teachers and state workers, has been the top priority of Gov. Bevin's administration since day one. The historic budget Gov. Bevin signed reflected this commitment, as did the reorganization of the KRS board of directors and the selection of the PFM Group to conduct a thorough audit of (the Kentucky Retirement Systems) and KTRS. The Bevin administration is intent on fixing the country's worst funded pension system. Kentucky taxpayers, retirees and current employees deserve nothing less.”