Kentucky could issue $816 million in bonds to repay the $562 million borrowed since 2005 from the Kentucky Teachers' Retirement System, Frankfort, to cover shortfalls in retired teachers' health insurance costs, confirmed Beau Barnes, deputy executive director of the $13.3 billion system.
The proposal was made by Gov. Steve Beshear. The budget bill still requires legislative approval.
Mr. Barnes said the repayment to the fund would include an interest payment of 7.5%, the fund's actuarial rate of return. He noted that the state already has repaid $41 million of the debt through installment payments.
“We are grateful the governor has addressed this important issue,” Gary Harbin, the system's executive director, said in a news release. “This is a step in the right direction that will return redirected contributions to the fund, further securing the retirement benefits for all retired teachers in Kentucky.”
The system was 63.6% funded as of Dec. 31.