Cost of Living Adjustments

Governor Bevin and some legislative leader have mentioned that without doing anything to address the pension crisis (the governors words) could cost every Kentuckian between $10,000 and $14,000 but they don't mind it costing  a 60 year old, single female retired teacher over $70,000 over the rest of her life.

COLA's are plainly part of the Inviolable Contract  see KRS 161.620(2) and KRS 161.714, see below.  By suspending COLA's for five years the General Assembly will be violating the law, which will  without a doubt be challenged in court.

The 1.5% COLA is in statute, and there is no provision for it to be adjusted or suspended.  

 KRS 161.620(2)

(2) Effective July 1, 2002, and annually on July 1 thereafter, the retirement allowance of each retired member and of each beneficiary of a retirement option shall be increased in the amount of one and one-half percent (1.5%), provided the retired member had been retired for at least the full twelve (12) months immediately preceding the date that the increase is effective. In the event that the retired member had been retired for less than the full twelve (12) months immediately preceding the date that the increase is effective, then the increase shall be reduced on a pro rata basis by each month that the retired member had not been retired for the full twelve (12) months immediately preceding the effective date of the increase.

161.714 Inviolable contract -- Exception.

It is hereby declared that in consideration of the contributions by members and in further consideration of benefits received by the state from the member's employment, KRS 161.220 to 161.710 shall constitute, except as provided in KRS 6.696, an inviolable contract of the Commonwealth, and the benefits provided herein shall, except as provided in KRS 6.696, not be subject to reduction or impairment by alteration, amendment, or repeal.

It should be noted that the 1.5% COLA has been around since 1990.  The reference to 2002 in the statute reflects how it is now pro-rated for retirees in their very first year of retirement.

Not only is it illegal to suspend COLA's of retired teachers.  TRS COLA's are prefunded, 1.74% of an active teachers pay is allocated to prefund COLA's for their retirement.  By suspending COLA's the General Assembly will be using your money to bail out their responsibility of funding the pension system.