Benefits are financed through member contributions, contributions by the state, and income accruing from the invested reserves of the system. The General Assembly has set the member contribution rate for non-university members at 12.855 percent of gross salary for members that joined the system prior to January 1, 2022 and 14.75 percent of gross salary on or after that date. Employers contribute 13.105 percent of gross salary for persons that joined the system prior to July 1, 2008, 14.105 percent for members that joined on or after July 1, 2008 but prior to January 1, 2022 and 10.75 percent for persons that joined on or after January 1, 2022.
University faculty members who joined the system prior to January 1, 2022 contribute 10.4 percent of gross salary and their employer contribute 13.65 percent. University faculty members joining on or after January 1, 2022 contribute 9.775 percent of gross salary with the employer matching that amount.
The employer match for Department of Education, Department of Workforce Development, and university employees is budgeted within these respective budget units and is then transferred to the Teachers' Retirement System.
Funding for the employer match on behalf of local school district members is provided as an adjunct to the Support Education Excellence in Kentucky program (SEEK) within the Department of Education.
Policy
The Governor's budget fully funds the teachers' pension and medical benefits. An additional $128,289,000 from the General Fund is provided in fiscal year 2027 over the current budget and an additional $212,193,400 in fiscal year 2028.
I ne system's actuary has determined that the medical insurance trust fund's unfunded liability will be fully funded after fiscal year 2027. The Governor's budget honors the promise made when the Shared Responsibility plan began in 2010 when active local school district certified employees began contributing a portion of their paycheck to the fund, by suspending KRS 161.540(1)(e) to permit them to return the 3.75 percent to their family budgets beginning July 1, 2027 since it is no longer needed to help finance the trust fund's liabilities. In fiscal year 2025, active certified local school district employees paid in $153 million to the fund which will now be retained by them.
The budget includes an additional $43,418,800 from the General Fund in fiscal year 2027 to cover the actuarially determined shortfall in employer match from prior years.
The budget includes additional General Fund to support the State Cost of Shared Responsibility in the amount of $16,400,000 in fiscal year 2027 and $28,200,000 in fiscal year 2028 for a total of $100,600,000 in fiscal year 2027 and $112,400,000 in fiscal year 2028.
The Governor's budget includes additional funding in the amount of $286,600 in fiscal year 2027 and $579,000 in fiscal year 2028 to fund a 2% salary increment in fiscal year 2027 and an additional 2% in fiscal year 2028.
The Governor's budget includes additional Restricted Funds in the amount of $900,000 in fiscal year 2027 and $1,700,000 in fiscal year 2028 to fund ongoing security upgrades and required system enhancements, to the Teacher's Retirement Pathway System.