Contribution Rates for 2014-15 and 2015-16
The Kentucky Retirement Systems (KRS) Board of Trustees is required by KRS 61.565 to determine the employer contribution rates for the Kentucky Employees Retirement System (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS) based on an annual actuarial valuation of each plan. Pursuant to KRS 61.565(3)(c), the rates for the KERS and SPRS systems must be established for both years of the biennium and cannot be changed for the second year of the biennium.
Additionally, KRS 61.565(6) requires the KRS Board to establish the employer contribution rates for CERS that will phase-in to the full actuarially required contribution for the health insurance fund over a ten (10) year period using the 2007-2008 fiscal year contribution rates as the base rates. The most recent actuarial valuations were performed by the KRS actuary - Cavanaugh Macdonald - for the fiscal year ended June 30, 2013. The following employer rates, to be effective July 1, 2014, are the actuarially recommended funding rates, as set forth in the 2013 valuations. The KRS Board adopted these rates at its meeting held on December 5, 2013 in compliance with the requirements of KRS 61.565:
2014-15 and 2015-16 KERS & SPRS Contribution Rates
KERS & SPRS
* The rates set forth above for the KERS and SPRS plans are the actuarially recommended contribution (ARC) as set forth in the 2013 annual valuation. The rates actually to be paid by KERS and SPRS participating employers are set by the Kentucky General Assembly in the biennial budget legislation. During its 2014 Regular Session, the General Assembly will establish the actual rates to be paid by KERS and SPRS employers. According to the statutory language enacted during the 2013 legislative session (Senate Bill 2), the General Assembly has promised to appropriate 100% of the ARC beginning with the 2015 fiscal year and thereafter.
2014-15 CERS Contribution Rates
** The rates set forth above for the CERS plans reflect the ten-year phase-in of the health insurance portion of the rate, as required by KRS 61.565(6).
The newly approved rates will result in substantial savings for Kentucky’s cities and counties during FY 2015. The foundation for the savings was set in 2012 when the KRS Board voted to transition from a self-insured health plan to a fully-insured health plan provided by Humana for its Medicare eligible retirees. This decision resulted in an actuarially determined reduction in the unfunded liability for health insurance of approximately $2.5 billion. This reduction caused a decrease in the employer contribution rate from local governments necessary to fund health insurance benefits in FY 2014 and this reduction continues to be realized in FY 2015. The total estimated savings for all participating CERS employers in FY 2015 compared to FY 2014 is $34.7 million dollars.