Alice Forgy Kerr's Letter on KAPT

Below is a copy of one of the letters State Senator, Alice Forgy Kerr is sending out in response to the overwhelming disapproval Kentucky citizens have voiced over the senate raid of the KAPT funds. I post the entire letter because I think it is important to keep remarks in the context of the writer's intent. I disagree with the senator on several points and will go into the areas of disagreement in later posts. However, for the moment I give the forum to Senator Kerr:

I appreciate the time you have taken to contact me and to express your concern about the Kentucky Affordable Prepaid Tuition program (KAPT). Let me assure you that neither the full General Assembly nor the Senate has ever transferred private investment funds out of the KAPT program into the state budget. To be frank, I'm astounded by the misinformation that State
Treasurer Jonathan Miller has been circulating.

As I'm sure you're aware, in 2000 the General Assembly created the KAPT program to provide Kentucky families with the ability to invest in future college credits. The program was to be funded by combining the contributions of all participants to maximize benefits from institutional investment activities. According to the KAPT Web site, the tuition guarantee is contingent upon the fund consistently meeting its investment targets.

What Kentuckians may not realize is that, in the event of a major downturn in the market, KAPT is supposed to be "backed" by 75 percent of the State Treasurer's Unclaimed Property Fund. The problem is that a separate State Treasurer's Unclaimed Property Fund account does not exist. The unclaimed property fund is really part of the larger General Fund that state
government uses to pay its bills. This ultimately makes the state's General Fund the "guarantor" of the KAPT program.

With this fact in mind, the legislature closed new enrollment to the KAPT program from 2002 to 2004 due to concerns regarding its potential drain on the state's General Fund. KAPT investments were not keeping pace with double-digit increases in college tuition. When the law enacting the moratorium ended the Senate and the Governor advocated for continuing the
moratorium even though the bill (2004 budget bill) that included the moratorium language wasn't passed.

After the adjournment of the 2004 Regular Session, KAPT's governing board chose to ignore our requests to continue the moratorium and began enrolling new members into the program. The board took advantage of the absence of a law barring enrollment and opened the General Fund to further liability.

As tuition increased and KAPT enrollment continued to outpace the KAPT investment growth, the June 2004 actuarial analysis showed the expected value of liabilities as $103,664,716 and the value of assets as $89,964,665 for a difference of $13,700,051 or -13.2% of liabilities. Consequently, before the General Assembly began its budget deliberations this year,
Treasurer Miller and the KAPT board attempted to transfer $13.7 million from the General Fund to the KAPT reserve to cover the program's unfunded liabilities. While the infusion of the $13.7 million from the General Fund certainly bolstered the actuarial outlook for KAPT, opening the program to new enrollees last summer simply served to further increase the unfunded
liabilities of the program - an avoidable error by the board.

In February, the Senate transferred the $13.7 million back to the General Fund in its version of the state budget. The House agreed to the transfer. The widely misreported $13.7 million "raid" of the KAPT fund was merely the General Assembly transferring its funds back from the KAPT program's reserves. These were not private funds invested by Kentucky families in
the pre-paid tuition program.

I certainly appreciate your concerns about the actuarial soundness of the KAPT program and the reversal of the General Fund transfer to KAPT. Nonetheless, it is important to fully understand the context in which these actions occurred and to know that the funds recouped in the final version of the current budget bill are not, and have never been, private funds but are
the state's General Fund dollars.

Regarding current enrollees of the KAPT program, the goal of the entire General Assembly is to ensure that the program is fiscally sound now and in the future. However, the college education of young Kentuckians and the health of the general fund should not be placed into jeopardy simply to provide Jonathan Miller with a way to promote his political ambitions. As
an aside, Miller's unfounded attack on the Senate is made all the worse because he has actually used investment income from KAPT to pay for television ads promoting his political future.

Thank you again for taking the time to contact me regarding the KAPT program. I hope this information has been helpful to you. Please feel free to contact me anytime regarding this issue or any others that may arise.

Best regards,
Alice Forgy Kerr
State Senator

Institute Common Sense

"Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it." - Mark Twain


I would like to think the smart people who just happen to have a warped sense of humor are running the world. Perhaps that was the case in Twain's time, but lately evidence indicates it is the imbeciles who are in charge and they really mean to screw up everything they touch. We can't do much about the rest of the world, but perhaps we should institute a common sense test for public office in the United States. Attach it to the civil service exam to rid the country of bureaucrats who cannot put policy into ordinary language. Bar any elected official who cannot show common sense from ever proposing legislation. Use the common sense test to cull news people from media access when they cannot recognize the difference between facts and BS. It might take a while but eventually we would get back to the smart people. Then all we would have to worry about is their tendency to put us on.

Louisville: Come protest Bush's B.S.!

President Bush is coming to Louisville, KY to promote his Social Insecurity plan. This is the plan that sucks money out of the group fund, leaving all those minimum-wage folks with about enough money for cat food in their new 'personal' accounts.

Two groups are scheduling protests so far:

Group 1: OurFuture.org

Subject: Louisville, KY Rally to Protect Social Security from Privatization

"On Thursday, March 10, 2005, President Bush will head to Louisville, KY to push his Social Security privatization scam that cuts our guaranteed benefits and heaps trillions in debt onto our backs. Americans United to Protect Social Security is organizing a rally to protect Social Security from privatization.

Please join us to stand up to the White House to say NO to the privatization scam."

WHAT: Rally against the privatization of Social Security.

**SIGNS WILL BE PROVIDED**

WHEN: THURSDAY, March 10, 2005. Assemble at 10:00AM

WHERE: Metro Hall Steps
Old Jefferson County Courthouse, in front of the Statue of Thomas Jefferson
527 West Jefferson Street (between 5th and 6th streets) Louisville, KY

RSVP ONLINE: http://www.ourfuture.org/ss_rallies_rsvp.cfm

For more information, please contact:
Robby Mook, Americans United to Protect Social Security, at robbymook@hotmail.com

Directions to Metro Hall:

From Interstate 264, or Interstate 64, connect to Interstate 65

From INTERSTATE 65 NORTH:
Exit at 136B to Brook Street
Turn Left onto Muhammad Ali Blvd. at the light Turn right onto 2nd Street Turn Left onto Jefferson Street. Metro Hall is between 5th and 6th streets.
It is a stone building with large columns and a statue of Jefferson out front.

From INTERSTATE 65 SOUTH:
Exit at the Jefferson Street exit and turn right Follow Jefferson Street.
Metro Hall is between 5th and 6th streets. It is a stone building with large columns and a statue of Jefferson out front.



Group 2: Louisville Peace Action Committee

"Celebrate the Preservation of Social Security!

Greet George W. Bush with a hearty Louisville welcome this Thursday, March 10th. Proclaim loud & clear our desire to maintain Social Security for ALL eligible Americans."

Schedule of Events:

7:00 – 9:00 am: Social Security celebration with banners and signs. Third and Main Streets.

9:30 am: Congregate at the NE corner of 5th and Market Streets (next to National City Bank).

10:00 am: Press Conference and Rally for Social Security. Wear warm, festive attire. Party hats and noisemakers welcome!

10:30 am: Walk towards the Kentucky Center for the Arts where George Bush will promote his plan to privatize Social Security.

Information:

"Social Security WORKS for Everyone!

There is no crisis in Social Security. Scare tactics are being used to frighten the American people in an attempt to end Social Security.

Privatization is being pushed as a solution, when in fact, private accounts push Social Security over the edge.

The White House is following an ideological blue print that has been around for decades as the right-wing has been planning to end Social Security, in their own words, for six decades.

If privatization succeeds, the average retirement benefit would be cut by 45 percent.

There is a very wealthy coalition working now to end Social Security – because they would make tremendous financial gains with private accounts.

The people over 55 should not be lulled into believing that they are safe from this ax, which is being wielded against Social Security.

Because Social Security is much more than a retirement plan, widows and orphans and disabled workers will be in an economic free fall."

Visit the LPAC Website for any changes to the schedule:
www.louisvillepeace.org

Freedom to Question

A large portion of the American public honestly believes it is wrong to question our government's foreign policy decisions. They do not care if the weapons of mass destruction ever existed anywhere but in the minds of Bush administration leaders. They stand squarely behind the president because they trust him to know what is going on and to act in their best interest.

The people I am talking about are not stupid or uncaring. They care deeply about the troops. Many of them served in the military and have to face the same kind of dangers our troops are facing now. They may not know or want to know anything about the lives of ordinary people in Iraq, but they believe what we are doing there is going to make those lives better. Iraq may be half way around the world from the problems they deal with on a daily basis, but I doubt that it is far from their prayers.

A lot of good, honest, hard-working people disagree with me about the president, the war, and US foreign policy. When those disagreements are based on more than blind faith in the motivations of the president they are worthy of respect. Disagreeing is the first step in a healthy debate and America needs all of us to engage in healthy political discourse. The problem occurs when blind faith in the president becomes suppression of dissenting views. When citizens believe leaders share their values, and act in accordance with those values questioning should be met with answers. Instead of answers, what I am getting is accusations that questions are un-American.

Questioning the president's actions is now akin to treason. Administration officials screen media questions before hand to determine which they are prepared to answer. Most of the time the Whitehouse staff spoon-feeds the media prepared statements instead of answering the hard questions. Those of us who would ask more difficult questions or publicly challenge the administration are denied access. It has become so accepted to stifle the press that half of high school students believe there should be suppression.

We are in danger of losing both free speech and a free press if we do not challenge this trend. These freedoms are essential if we are to remain to a free nation. Even if you believe the president is right in his foreign policy consider the risk we take to give up freedom at home to spread it abroad.