An attempt at mediation between state lawmakers and a Louisville mental health nonprofit over its bankruptcy has yielded little progress. Earlier this month, member of Seven Counties Services and a handful of state lawmakers met to discuss what, if any, deal could be reached over the nonprofit’s bankruptcy filing.
Under state law, Seven Counties is required to pay a larger share into its employees’ pensions than other types of pensions. The rising costs of those contributions, it claims, forced it into bankruptcy, and a federal judge ruled that it would not have to pay for its unfunded pension liabilities, estimated at about $90 million.
Greenville State Rep. Brent Yonts is part of an ad-hoc group of lawmakers trying to reach a deal Seven Counties.
“They at that moment in time did not come to the table with anything to offer,” said Yonts. “And I explained my viewpoint that in order to resolve this issue in the context of the bankruptcy, there had to be something that was negotiable other than saying ‘we can’t do anything.’”
Lawmakers are eager to reach a deal, however, because if the appeal rules in Seven Counties’ favor just like the lower court’s decision, it could set a precedent for similar quasi-governmental agencies, potentially leaving the state holding a $2.4 billion debt in unpaid liabilities should those agencies also jump the sinking ship.
State lawmakers are calling for more transparency in how the state’s largest pension fund invests its money into secretive hedge funds and private equity.
Pension Oversight Committee co-chair Sen. Joe Bowen, a Republican from Owensboro, pressed KRS’ investment officer David Peden over the lack of transparency of its investments, saying, " If statute required it, this would have to become transparent. So using that scenario are you saying to us that these current consultants, managers that we got would go away?"
A Kentucky city is suing the state's public pension system over its investment of county employees' retirement money into "risky" hedge funds.
An attorney for Ft. Wright, a northern Kentucky city of 5,700, filed a class-action lawsuit Monday alleging that Kentucky Retirement Systems improperly used money from one of its subsidiary funds to make investments that were illegal under state law.
The civil suit, filed in Kenton Circuit Court, alleges that KRS put an "unreasonably large percentage" of money from a subsidiary fund -- County Employment Retirement System (CERS) -- in "high risk investments which are not appropriate investments for fiduciaries under the common law of Kentucky."
KRS has come under increasing scrutiny over the last couple of years due to poor performance, investments in risky hedge funds and, more recently, the handsome fees those hedge funds reaped from its contracts with the state's beleaguered $15 billion pension system. KRS was recently named among the worst-funded pension system in the nation, at under 24 percent funding.
The lawsuit seeks a court order of damages in total of at least $50 million, which Ft. Wright argues was spent on "management fees" charged by hedge funds and private equity groups per KRS' investment strategy. The lawsuit also seeks to establish a separate investment portfolio for the subsidiary fund, CERS. This would effectively divorce it from the current system whereby CERS' assets are "co-mingled" with KRS.
A group of Kentucky lawmakers has a new summer assignment: shoring up the state’s failing pension systems. At least two of Kentucky’s six pension plans are at a high risk for failure. And their troubles have been highlighted by Bloomberg, the New York Times and the Pew Center.