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From YouTube: House Budget Review Subcommittee on Personnel, Public Retirement, and Finance (2-8-23)
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A
Cut
this
off
right
at
about
12
30.-
maybe
a
little
few
minutes
beforehand.
So,
but
would
you
move
on
going
up
here
as
a
bow
comes
up
here?
I'm
gonna
go
ahead
and
welcome
you
all
to
the
first
meeting
of
the
subcommittee
for
personnel,
public
retirement
and
finance
and
let's
go
ahead
and
get
the
roll
called.
A
Okay,
very
good.
Thank
you
very
much.
We
do
not
have
any
minutes
so
technically
we
don't
have
a
quorum,
but
but
we
we're
going
to
go
through
and
have
Mr
Beau
Barnes
talk
to
us
about
the
TRS
and
so
forth,
and
so
Barnes
you
already
up
there
and
if
you
don't
mind,
just
raise
your
hand
if
you
sort
of
tell
the
truth.
Whole
truth,
nothing,
but
the
truth.
I.
C
C
Yes,
good
afternoon,
my
name
is
Beau
Barnes
I
serve
as
Deputy
executive
secretary
and
as
general
counsel
of
the
teachers
retirement
system
been
asked
today
to
make
a
presentation
about
unused
and
accrued
sick
leave
at
retirement
and
how
that
unused,
accrued
sick
leave
is
applied
for
retirement
purposes.
Also,
I'm
just
going
to
do
a
quick
recap
and
I'll
try
to
make
this
quick,
given
the
time
constraints
on
the
current
budget
and
on
a
Actuarial
perspectives
concerning
the
retirement
system,
so
I'll
go
through
those
I'll
start
with
those
right
now.
C
So,
first
of
all
the
current
budget
full.
This
is
a
summary
of
the
2022-2024
budget
and
the
Appropriations
made
for
TRS.
This
is
a
great
new
slide.
It
is
a
slide
that
shows
why
we
and
all
of
our
members
across
the
Commonwealth
are
very
thankful
for
what
the
general
assembly
did
in
the
last
budget
just
going
through
this
quickly.
This
budget
marks
the
eighth
straight
year
of
full
or
very,
very
near
full
funding
for
the
pension
trust
and
by
very
near
I,
mean
in
2017.
We
got
99
of
the
funding
2018.
C
We
got
97
percent
of
the
funding.
So
great
news
there
that's
over
1.36
billion
dollars
this
year
and
next
year
the
TRS
will
receive
an
additional
funding
that
is
so
critically
important,
because
it's
going
to
allow
us
to
implement
our
funding
plan
to
pay
off
our
Legacy
unfunded
liability.
We're
going
to
talk
about
that.
The
next
two
slides,
but
that's
very
important.
That's
really
what
the
Commonwealth
is
struggling
with
right
now
is
dealing
with
right
now,
sorry,
but
making
the
payments
is
paying
off
that
Legacy
unfunded
liability.
C
We
also
received
149
million
dollars
for
the
two
years
for
the
state's
portion
of
shared
responsibility.
This
is
very
quickly.
Shared
responsibility
is
the
solution
that
saves
retired
teachers,
health
insurance,
where
the
state
had
been
voluntarily
paying
for
almost
all
the
cost
of
health
insurance
in
2010
our
board
direct
staff
to
get
together
stakeholder
groups
for
about
a
year
and
a
half,
and
we
came
up
with
a
solution
where
active
teachers
from
time
teachers
and
school
districts
also
stepped
up
and
started
paying
more
to
the
health,
insurance
trust
and
the
state's
responsibility.
C
I
was
reduced
to
new
members
under
the
age
of
65,
less
what
those
retirees
pay
for
their
health
insurance,
so
good
news
there
full
funding
for
health
insurance.
There
are
78
million
dollars
in
the
budget
that
was
requested.
We
are
our
budget
requests,
go
to
the
office
of
state
budget
director
and
to
lrc
in
the
fall
preceding
the
budget
year.
There's
78
million
dollars
in
there
for
certain
sick
leave
liabilities
for
retired
teachers.
C
You
can
talk
about
that
in
more
detail
later,
there's
also
479.2
million
dollar
lump
sum
payment
to
pay
off
liabilities
for
certain
other
benefit
adjustments
that
were
being
paid
over
a
20-year
amortized
period
with
interest.
The
Commonwealth
paid
off
that
like
paying
off
a
loan.
So
that's
in
there
too,
and
that's
another
item
I'm
going
to
talk
about
in
a
little
more
detail
in
later
slides.
C
C
Next
slide
is
going
to
provide
a
little
bit
more
detail
about
what
we're
seeing
here.
I
will
note
just
very
quickly
one
reason
that
you
will
see
from
2020
to
2021
a
decline
in
the
funded
status
and
an
increase
in
the
viabilities
is
that,
although
the
actuary
every
single
year,
our
outside
independent
actuary,
does
evaluation,
they
look
at
what
they
expected
to
happen
and
what
happened,
for
example,
what
were
investment
returns
for
the
year?
What
do
they
expect?
What
were
retirements,
what
was
maturity,
mortality
and
every
single
year?
C
They
do
a
gains,
loss
statement
and
those
gains
losses
every
year
are
incorporated
into
future
budget
requests,
so
we're
addressing
any
changes
to
what
we
expected
and
what
happened
every
year,
but
every
five
years
this
is
significant.
They
conduct
what's
called
an
experienced
study.
They
look
over
the
past
five
years.
What
happened
versus
what
did
they
project
and
they
also
look
forward.
You
know
five
years
now
later.
C
What
do
the
investment
markets
look
like
with
five
years
more
knowledge,
and
so
at
that
time,
every
five
years
is
when
they're
going
to
make
changes
or
recommend
changes
to
assumptions
like
investment
rate,
return,
mortality,
retirement
patterns
or
whatever,
and
we
had
an
experience
study
that
concluded
for
the
five-year
period
ending
June
30th
2020.
We
moved
to
a
very
conservative
investment
return
figure
of
7.1
percent,
even
though
historically
we've
done
better
than
7.1
percent.
We
moved
to
a
more
appropriate
mortality
table
that
is,
teacher-specific
Teachers
live
longer.
We
pay
benefits
longer
that
increases
liabilities.
C
So
that's
why
you
see
that
fluctuation
from
2020
to
2021.,
also
I
just
want
to
point
out
again.
You
know
this
additional
funding
is
helping
implement
the
funding
plan.
I'm
going
to
talk
about
in
the
next
slide
is
also
helping
with
our
investments.
For
example,
we
have
greater
liquidity
now
so
that
when
we
earn
down
markets
like
we
had
the
one
that
started
last
year
hit
rock
bottom
this
summer
we
have
the
show
short-term
investments
in
cash
to
buy
low
selling
stocks
and
that's
what
we
do
continually.
C
We
buy
low
and
we
sell
High
continuous
process,
our
opportunities
and
down
markets
and
that
additional
funding
which
is
helping
us
do
that
so
again,
huge
huge
deal,
the
additional
funding
very
appreciative
of
it
30-year
projections,
and
this
again
this
these
projections
are
based
on
a
conservative,
7.1
investment
return
which
again
this
is
a
long-term
number
investment
return
assumption
it's
not
every
year,
it's
not
every
five
years.
It
is
long
term,
okay
and
long
term.
We've
done
better
than
7.1
percent.
The
top
graph
you'll
see
the
thick
blue
line.
C
That
represents
the
funded
ratio
of
TRS
and,
on
the
left
hand,
side
you'll,
see
where
we
are
today
the
58.8
percent,
and
then
you
see
eventually
out
there
we
get
to
a
hundred
percent
funded
and
where
it
levels
off
now,
in
the
early
years,
you're
going
to
notice
that
it
doesn't
grow
much
the
funded
status
does
not.
Funded
ratio
does
not
grow
much
and
the
reason
for
that
and
I'll
do
explain
this.
By
analogy,
it's
like
a
home
mortgage,
everybody
with
a
home
mortgage
knows
in
the
early
years
you're
paying
more
interest
than
principal.
C
You
know
you're
not
paying
off
much
principle
at
some
point
and
there's
a
flash,
a
point
where
you
start
getting
more
and
more
principal
paid
down
and
it
flips
and
at
some
point
you're
paying
more
principal
than
interest,
and
then
you
see
that
rises
very
steeply.
So
that's
that's!
What's
by
analogy!
That's
what
you're,
seeing
here
the
thick
gold
bar
represents
the
unfunded
liabilities,
which,
on
the
last
page,
you
have
seen
for
June
30th
2022
16.9
billion
dollars
in
unfunded
liabilities.
C
You
see
in
just
a
few
years
we're
going
to
start
seeing
a
sharp
downward
trend
on
the
unfunded
liabilities.
I
will
note
here
before
I
go
to
the
bottom
graph.
You
see
the
light
blue
lines
and
the
light
gold
lines
and
you'll
see
light
green
lines
of
the
bottom
grass.
Those
represent
a
what.
If
what,
if,
instead
of
a
7.1
percent
return,
we
had
an
8.1
percent
return
on
average
over
this
period
of
time.
What
happened?
What
would
happen
if
we
had
a
6.1
percent
return
on
average
over
this
30-year
period?
C
So
you
see
that
changes
the
projections
somewhat
moving
to
the
bottom
graph.
The
the
thick
green
bar
represents
the
contributions
that
are
required
from
the
Commonwealth
of
Kentucky
to
fund
the
TRS
pension
fund.
You
see
those
grow
steadily,
but
then
drop
precipitously
around
2046.
That
is
when
we're
100
funded.
The
unfunded
liabilities
are
zero.
We
don't
need
that
1.36
billion
dollars
that
I
showed
you
that
was
appropriated.
You
know
on
the
earlier
slide.
C
This
slide
shows
the
different
retirement
account
tiers
at
TRS.
We
have
four
and
the
account
tier
that
an
individual
is
in
depends
on
when
they
enter
the
system.
I
will
note
that
for
trs3
and
trs4
there
are
sick
leave
implications
that
we're
discussing
today,
in
which
I
will
discuss
in
a
little
more
detail
in
a
later
slide.
C
This
just
shows
who
our
membership
is
at
TRS.
95
of
our
members
are
in
the
school
districts
overwhelming
we
are
a
school
district
employer
and
we
also
have
the.
We
also
have
five
universities.
If
you
take
those
two
groups
out,
the
remaining
membership
is
really
just
a
small
sliver
of
our
remaining
membership,
a
small
but
important
slivermatic
membership.
You
have,
for
example,
Department
of
Education
tech,
ed
schools,
co-ops
School
for
the
Blind
School
for.
B
C
Deaf,
but
we
are
a
very
homogeneous,
Retirement
System
sick
leave
days.
Okay-
and
this
is
sick
leave
days
in
local
school
districts.
Okay,
there's
different
ways
that
that
unused
accrued
sick
leave
at
retirement
can
be
applied
for
retirement
purposes.
The
one
we
hear
about
most
one
that
is
discussed
most
is
what
we
call
sick
leave
as
salary
credit,
salary
credit.
C
The
other
is
going
to
be
sick
leave
as
service
credit,
which
I
will
discuss
somewhat
here,
but
in
more
detail
on
the
next
slide,
so
under
state
law,
districts,
school
districts
and
it's
voluntary
they
don't
have
to,
but
they
can
pay
retiring
teachers
for
their
unused
sick
leave
at
up
to
30
percent
of
their
daily
rate.
Okay
and
then
in
turn
that
lump
sum
payment,
just
in
the
school
districts
can
be
applied
to
the
final
average
salary
that
retiring
teacher
in
the
retirement
calculation,
therefore
raising
their
salary.
C
C
This
was
not
a
TRS
bill
and
I
wasn't
around
in
1981,
but
I
I
do
remember.
You
know
looking
with
the
actual
words
letters
back
then,
and
that
actually
was
later
expressed.
A
concern
that
TR
has
had
in
1981
was
that
that
this
benefit
got
approved
without
funding.
C
There's
no
funding
mechanism
and
I
know
because
I've
been
with
the
retirement
system
over
20
years
talking
to
staff
who
were
here
in
1981
that
they
were
very
concerned
about
that
we
TRS
were
not
policy
makers,
but
we
do
have
an
obligation
to
inform
policy
makers
when
legislation
will
increase
liabilities
of
the
system.
You
know
and
so
talking
to
people
who
were
then
they
did
do
that
there
were
a
lot
of
communications
and
we
really
did
not
need
to
have
this
unfunded
benefit.
C
C
C
Let
me
for
tr's
three
members
I
talked
about
before
they
may
earn
no
more
than
300
sick
leave
days,
and
there
are
people
who
work
a
long
time
who
retire
more
than
360
days
for
trs4
for
individuals
who
began
honor
after
January
1st
2022.
They
cannot
use
sick
leave
as
salary
credit.
The
way
it's
being
done
now
completely
different
they're
walled
off
they
can
have
sick
leave
apply,
they
can
still
can
get
paid,
30
percent
of
their
unused
sick
leave
or
they
can
have
sick
leave
applied
as
service
credit
and
sickly.
C
The
surface
credit
is
what
our
other,
not
all,
but
most
of
our
other
employers
apply
sick
leave
as
service
credits,
so
you
retire
with
27
or
30
years
and
100
days
of
sick
leave
that
employer
May
voluntarily
choose
to
pay
the
Actuarial
cost
of
that
100
sick
leave
days,
and
so
that
that
employer
will
retire
with
30
years
and
100
days.
Okay,
that's
sick
leave
is
service
credit
and
again
that's
subjects
to
a
300-day
maximum
for
trs3
and
for
trs4
members.
C
Trs4
members
could
still,
if
their
employer
chooses
to
pay
the
cost
of
sick
leave
instead
of
the
Commonwealth
paying
the
cost
of
sick
leave.
Here
we
have
a
current
budget
and
I'm
going
to
go
to
the
next
the
future
budget
next,
and
that
will
be
my
last
slide.
But
what
does
the
current
budget
do
in
regard
to
sick
leave
costs
or
just
the
costs
in
general?
C
The
top
line
here
just
so
you'll
know
the
Top
Line
there
and
we
have
FY
22
the
last
year,
the
last
budget
here
too
just
for
comparison
that
top
line
or
the
Appropriations
for
pension,
which
include
some
sick
leave
funding
which
I'm
going
to
talk
about
just
a
second.
This
is
the
TRS
budget
request.
It
does
not
include
seek
formula
funding,
that
is
in
the
KDE
budget
request,
but
the
seek
formula
funding
includes
the
state
statutory
contribution
for
pensions.
A
Well,
let
me
if
it
let
me
if
you
know,
let
me
cut
you
off
right
there.
If
you
don't
mind
what
I'm
I'm
trying
to
work
through
my
mind,
you
got
78
million
dollars
just
using
this.
This
slide
up
here
and
I,
assume
that's
around,
say
around
40
million
39
million
ish
each
year
that
we
deal
with
prior
to
the
green
box.
A
What
what
are
we
in
full
time?
Yeah.
A
C
C
That
foreign
included
payment
of
some
old
coalism
old
cost
of
living
adjustments
and
sick
leave
liabilities
for
retired
teachers,
so
99
million
of
the
479
million
was
for
colas
old
colas,
going
back
to
2008,
none
since
then
no
new
codes
additional
covers.
We
still
have
the
1.5
every
year,
statutory
and
also
for
sickly.
The
sick
leave
was
479
of
the
four
and
79.2
million.
380
million
of
that
went
to
pay
off
retired
teacher
sick
leave
liability,
okay,
so.
A
C
That's
78
million
or
39
million
dollars
a
year
that
paid
off
the
need
for
that
39
million
dollars
a
year
when
we
got
the
380
million
dollars
for
paying
off
retired
teacher
sick
leave
liability
and
we
made
that
you
know
it
took
care
of
the
70,
the
39
million
dollars
a
year,
the
78
million
dollars
total.
But
when
we
made
our
budget
requests
in
the
fall,
we
didn't
know
that
the
four
you
know
they
were
going
to
pay
off
this
retired
teacher
sick
leave
liability.
C
C
No,
we
are
that
we're
saving
when
they
paid
off
the
a
retired
teacher,
sick,
leave
liability,
they
reduced
budgets
going
forward,
and
that's
in
this
next
quit
about
1.2
percent
of
payroll
reduction
and
our
future
budget
requests,
because
of
paying
off
that
retired
teacher's,
sick
leave
liability
and
even
then
that
that
is
going
to
Trend
downward,
because
you
know,
as
I
noted
tr3
members
are
capped
at
300
days.
Not
a
lot
of
people
get
more
than
300
days,
but
enough
dude
makes
a
difference,
but,
more
importantly,
trs4
members
cannot
use.
C
6
leave
is
salary
credit,
so
that
started
January
1st
2022.
We
already
have
a
group
of
people
in
that
tier
and
every
year
more
and
more
people
will
be
in
that
and
there
will
be
less
and
less
liability
for
sick
leave.
The
salary
credit
that
the
Commonwealth
pays
for
so
that
1.2
percent,
which
is
about
47
million
dollars
a
year
that
will
Trend
downward
and
that
that
1.2
percent
47
million
dollars
a
year.
That
is
part
of
the
682
or
690,
and
the
690
690
million
dollars
for
each
fiscal
year.
C
We're
requesting
it
isn't
part
of
the
liability.
The
total
liabilities
that
we
are
requesting
funding
for
and
it
is
part
of
the
690
and
that
is
for
active
teacher,
normal
cost
and
normal
cost
of
their
sick
leave
and
to
pay
off
the
unfunded
liability
for
active
teacher,
sick
leave,
liability,
again,
retired
teacher,
secretive
liability
was
being
paid
for
one
way
to
39
million
dollars
a
year.
Active
teacher,
sick
leave
liability
and
the
normal
cost
of
their
sick
leave
is
part
of.
It's
is
part
of
the
overall
budget
request.
Okay,.
A
All
right
so
just
make
sure
I'm
clear
so
so
for
going
forward
we're
not
looking.
We
don't
need!
Oh
there's,
not
any
obligation
from
our
port
to
continue
that
39
million
dollars
going
forward.
No.
C
C
For
the
retired
teacher
sick
leave
again,
we
when
they
pay
the
479
they
paid
off
about
380
million
dollars
of
total
sick
leave,
liability
for
retired
and
active
teachers.
They
paid
off
the
retired
section
that
left
only
sick
leave
liability
for
active
teachers
of
about
407
million
dollars,
so
that
is
still
being
paid
for
as
part
of
our
adec
request.
C
Every
year
and
again,
it's
part
of
that
690
million
dollars
of
each
of
the
two
years
of
the
current
budget,
biennium
that
1.2
percent,
that
47
million
dollars
is
still
being
needed
and
it
will
be
needed
for
the
next.
Well,
it's
going
to
Trend
downward.
You
know
that's
the
important
thing
because
of
trs4
and
they
don't
get
sick
leave
as
salary
credit
you're,
going
to
start,
seeing
that
1.2
percent
Trend
downward
and
eventually
in
about
20
years,
all
unfunded
liability
for
active
teachers.
C
In
addition
to
the
retired
teacher,
sick
leave
liability,
which
is
never
paid
off
that
liability
for
sick
leave
for
active
teachers
will
also
be
paid
off
in
about
20
years
and
then
the
normal
cost.
How
much
we
have
to
put
aside
each
year
that,
with
inve
over
a
teacher's
career,
that
with
investment
income,
we
can
pay
for
their
sick
leave?
That
will
be
about
a
0.4
percent
of
payroll
or
about
15.7
million.
A
Dollars
a
year:
okay,
if
you
don't
mind,
I
might
bring
you
back
and
I
appreciate
explaining
some
of
the
the
situation
with
the
with
the
sick
pay
and
so
forth.
Like
I
said,
I
might
bring
you
back
down
down
the
road.
That's
okay
with
you!.
A
Do
apologize
for
cutting
you
off,
I
mean
what
my
intent
to
do
that,
but
I
got
I've,
got
some
understanding
at
12
30..
Is
there
any
quick
questions
from
anybody?
Okay,
all
right!
Well,
good!
Well,
once
again,
I
do
apologize
for
cutting
you
off.
I
would
like
to
come
back
in
I,
want
to
digest
a
little
bit
more
about
the
about
the
about
going
forward
and
what's
our
obligations
from
a
budget
standpoint,
but
I
appreciate
that
so
with
that.
Thank
you
very
much.
A
I
appreciate
that
next
week
or
next
time
we
meet
we'll
meet
every
every
week.
Now
the
agenda
is
going
to
be
pending
at
this
point.
So
I'll.
Let
you
all
know
that
will
that
will
come
out
shortly?
So
if
that
there's
no
any
other
questions
or
comments,
we
will
you
send
adjourn.
Thank
you.