Finance and Administration Cabinet
Kentucky receives national recognition for refinancing of bonds that helped protect retired school teachers’ health care benefits
FRANKFORT, Ky. (Dec. 15, 2010)— The Kentucky Asset/Liability Commission (ALCo) has been recognized by the Bond Buyer, a daily newspaper of public finance, as the Southeast regional winner of the Bond Buyer Deal of the Year Award for its successful sale of taxable funding notes to refinance internal loans owed by the Commonwealth to the Kentucky Teachers Retirement System (KTRS) in August 2010.
“The sale of these bonds helped us protect the long-term stability of health care and pension benefits for current and future retirees in KTRS and also led to a significant savings to the General Fund as a result of the refinancing,” said Gov. Steve Beshear.
The bond sale refinanced loans the state obtained beginning in 2005 from the KTRS Pension Fund to pay the KTRS Medical Insurance Fund at a total savings to the Commonwealth of $87.7 million over the next 10 years. Through the refinancing, the interest on the notes was reduced by more than half to 3.304 percent.
Gov. Beshear recognized that the efforts of many led to the success of the refinancing and funding resolution, including KTRS, Kentucky Retired Teachers Association, Kentucky Association of School Administrators, Kentucky Education Association (KEA) and KEA Retirees, Kentucky Superintendents Association, Kentucky School Board Association and Jefferson County Teachers Association.
“To be nationally recognized for this particular bond sale is a tribute to the many parties who worked as a team to make the sale possible and to rectify a funding mechanism that had caused concern for many people over several years,” added Gov. Beshear.
The 2010 awards, which considered deals that closed between Oct. 1, 2009, and Sept. 30, 2010, drew more than 70 nominations for transactions ranging in size from a few million to more than a billion dollars.
“The awards are designed to recognize innovation and creativity in municipal finance, preferably something that can be replicated in the market,” said Gavin Murphy, Bond Buyer national editor. “Kentucky’s deal provided a cost effective solution for a pressing financial issue by utilizing a new structure for a municipal bond issue, one that was designed to appeal to the maximum number of investors.”
Finance and Administration Cabinet Secretary Jonathan Miller serves as chair of both ALCo and the Pension Reform Work Group.
“It was through Governor Beshear’s leadership that we were able to reach the solution to this complex problem through such a collaborative effort,” said Sec. Miller. “It is an honor to have work honored through such a well-respected national newspaper as the Bond Buyer.”