KRS

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A new study shows that Kentucky has the worst-funded pension system in the nation, compounded by the fact that of all the states, the commonwealth is doing the worst at paying off its pension debt.

According to a new survey by S&P Global Ratings, Kentucky has $31. 2 billion in unfunded pension liabilities, and the state’s various pension funds have 37.4 percent of the money they need to make payouts to current and future retirees, the lowest ratio of all states.

Last month, state pension officials reported that the main pension fund for state workers — the $1.9 billion Kentucky Employees Retirement Systems non-hazardous fund — is only 17 percent funded and declined by about $347 million over the fiscal year that ended on June 30.

Officials blame $326 million of the loss on “negative cash flows associated with employer contributions” — which includes funds from local governments, the state and other agencies that participate in KERS — and a 4 percent increase in the number of retirees to whom the system had to pay benefits. The fund also saw a 0.68 percent decline in investment returns, attributing that to a loss of $21 million.

Meanwhile, the agency that manages the fund, Kentucky Retirement Systems, paid $123 million in fees to investment managers — a practice that has drawn fire from some lawmakers for being too secretive and costly.

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A judge has partially granted Gov. Matt Bevin’s request to remove a pension board member while a lawsuit over his dismissal is ongoing.

In an order, Franklin Circuit Court Judge Phillip Shepherd said Thursday Tommy Elliott can still participate in meetings of the Kentucky Retirement Systems Board of Directors and its committees, but as a non-voting member.

Bevin issued an executive order removing Elliott from the KRS board in April, three years before the end of Elliott’s appointed term. He sued Bevin over the move. Last month, Shepherd ruled that Elliott could remain on the board while the lawsuit transpired, but he didn’t attend two recent meetings.

The governor’s office on Wednesday argued that Elliott should be removed because of his absences and Shepherd partially agreed.

Bevin Asks Judge to Dissolve Order on Retirement Board

Sep 7, 2016
WFPL

Republican Gov. Matt Bevin has asked a judge to dissolve his order that allows Thomas Elliott to remain on the Kentucky Retirement Systems board.

Bevin removed Elliott from the board earlier this year. Elliott sued, and last month Franklin County Circuit Judge Phillip Shepherd temporarily blocked Bevin's order. But Elliott did not attend the board's next meeting. Bevin's attorney, Stephen Pitt, says skipping the meeting demonstrates Elliott's "lack of commitment."

Elliott's attorney said he did not attend the meeting because the judge issued his order two days before the board's meeting and Elliott had already scheduled some work meetings. Last week, Shepherd called Elliott's reason for missing the meeting "wholly inadequate."

Bevin has asked for a hearing at 4 p.m. Wednesday. The retirement board is scheduled to meet again on Thursday.

WFPL

The absence of the former board chair of the Kentucky Retirement Systems at official meetings is “not acceptable,” according to a judge who temporarily blocked the governor from removing the official.

Franklin Circuit Court Judge Phillip Shepherd ruled last week that Tommy Elliott could still be a member of the agency’s Board of Trustees while the court decides if the governor had the power to remove him from the board three years before his appointed term was set to end.

But Elliott did not attend meetings of the full KRS board or investment committee last week.

During a scheduling hearing on Tuesday, Shepherd said the poor condition of the pension system is an “all-hands-on-deck situation” and he criticized Elliott for not showing up.

“If Mr. Elliott’s too busy to serve, he ought to resign or he ought to be prepared to be replaced,” Shepherd said.

KRS

Gov. Matt Bevin’s attorney says the office will appeal a judge’s ruling that temporarily blocks the governor’s removal of the former chair of one of the state’s pension boards.

Kentucky Retirement Systems board chair Tommy Elliott sued the governor for removing him from the panel in April, three years before his term was set to expire. Attorney General Andy Beshear joined the lawsuit in June after Bevin abolished and reorganized the board, adding four new members.

On Monday evening, Franklin Circuit Court Judge Philip Shepherd ruled that Elliott should remain on the board while the case is still pending. Shepherd denied a request to temporarily block Bevin’s overhaul of the board.

Steve Pitt, Bevin’s general counsel, said the order was “inconsistent and improper” because Elliott was never a member of the governor’s newly constituted board.

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A judge says he will rule Tuesday on whether to temporarily block Gov. Matt Bevin’s reorganization of the board that oversees the pension system for most state workers.

Bevin abolished the Kentucky Retirement Systems board in June and created a new board with additional members. He also removed board chair Tommy Elliott in April, three years before the end of his term.

Elliott and Attorney General Andy Beshear have sued Bevin over the moves.

KRS attorney Brian Thomas said that the board needs clarity on whether the new board is legal before making important investment and personnel decisions in the coming weeks.

Ryland Barton

A state judge has ruled Kentucky’s Democratic attorney general can intervene in a lawsuit challenging the Republican governor’s decision to remove the chairman of the state’s retirement system board of trustees.

The decision means Attorney General Andy Beshear now has three pending lawsuits against Gov. Matt Bevin.

Earlier this year Bevin issued an executive order removing Thomas Elliot as chairman of the retirement systems’ board of trustees. The system is among the worst funded in the country with unfunded liabilities of more than $19 billion.

Elliott sued, saying Bevin did not have the authority to remove him. Bevin then issued another executive order, abolishing the board and re-establishing it under new rules.

J. Tyler Franklin

The former chairman of the beleaguered Kentucky Retirement Systems is heading to court to challenge his removal by Republican Gov. Matt Bevin.

Thomas Elliott has sued Bevin for removing him as chairman of the Kentucky  Retirement Systems board of trustees. Bevin's attorneys say he has the authority to remove Elliott. But Elliott says his term is set by state law and cannot be altered by the governor. A hearing is scheduled for Tuesday at 1 p.m.

The lawsuit is one of several challenging Bevin's reorganization of state boards and commissions. Labor unions are challenging the makeup of the Workers Compensation Nominating Commission and Attorney General Andy Beshear is challenging Bevin's decision to replace the University of Louisville board of trustees.

The Kentucky Retirement System has unfunded liabilities of more than $19 billion.

KRS

Kentucky Treasurer Allison Ball filed legal papers today to overturn the state pension system’s payment of $50,000 to cover the cost of its ousted chairman’s lawsuit against Gov. Matt Bevin.

Bevin removed the former chairman, Louisville banker Tommy Elliott, from the Kentucky Retirement Systems Board of Trustees in April — three years before his term expired. Elliott and another trustee sued the governor and KRS in Franklin County Circuit Court in June, seeking to restore Elliott to the board.

KRS paid their legal bill of $50,000, saying state law calls for the agency to pay for legal costs “arising from the performance” of trustee duties.

Ball, a Republican first-termer like Bevin, disagrees. In a written statement, she said the law applies to current members of the KRS board.

“Mr. Elliott is not a current member,” she said. “Whether the termination of Mr. Elliott was rightful or wrongful, he has, in fact, been terminated and therefore cannot use $50,000 of hard-earned money of Kentucky retired workers to pay for his legal challenge.”

WFPL

A decision by Kentucky Retirement Systems to pay the legal fees of its former chairman as he sues Gov. Matt Bevin is drawing sharp criticism from the governor’s office.

KRS, which manages pensions for state workers, is paying Louisville banker Tommy Elliott’s $50,000 legal bill from the lawsuit he filed against Bevin after he removed Elliott from the agency’s Board of Trustees. The suit was filed June 17 and was joined by KRS trustee Mary Helen Peter.

The legal bills were obtained by the Kentucky Center for Investigative Reporting through a public records request to KRS. The reimbursement, ultimately borne by KRS’ roughly 355,000 pension holders, drew a rebuke from the Bevin administration.

“This is a prime example of why there needed to be a leadership change at the Kentucky Retirement Systems,” said Steve Pitt, the governor’s general counsel.

KRS

The debate continues over whether Gov. Matt Bevin has the authority to replace the chair of the Kentucky Retirement Systems board before his term expires.

Last week, Bevin sent Kentucky State Police troopers to a KRS board meeting in order to arrest board chair Tommy Elliott if he participated. Bevin issued an executive order removing Elliott nearly a month before, but Elliott defied the order and continued presiding in a subsequent board meeting.

Bevin’s office said Elliott “voluntarily elected not to participate” in last week’s meeting.

Bill Thielen, executive director of KRS, said Monday that top officials in Bevin’s administration threatened to have Elliott arrested if he participated in the meeting.

“He decided he would not take part in the meeting,” Thielen said. “He sat in the audience. Police officers were there in the boardroom at both doors.”

KRS

Kentucky Governor Matt Bevin used state police officers to prevent the ousted chairman of the retirement system board from participating in a meeting Thursday.

Governor Matt Bevin removed chairman Thomas Elliott from the board last month.

But Elliott had refused to vacate his seat, saying Bevin could not remove him before his term expires.

Elliott attended Thursday's board meeting, but sat in the audience while state police officers stood nearby.

Elliot said the governor's office told him he would be arrested and charged with disrupting a public meeting if he participated.

Bevin spokeswoman Amanda Stamper said Elliot was not threatened with arrest. She said he was reminded he is not a board member and would be disrupting the meeting if he tried to participate, which is a misdemeanor under state law.

KRS

The chairman of the Kentucky Retirement Systems Board of Trustees is presiding at a meeting in defiance of Gov. Matt Bevin’s order removing him from the board.

Thomas K. Elliott took his seat at the head of the board table at Thursday’s regularly-scheduled board meeting, a day after Bevin issued the executive order to oust him. The board was scheduled to elect its leaders, but delayed that vote until the next meeting.

KRS Executive Director William Thielen said Bevin does not have the authority to remove Elliott. Board members voted to request an attorney general’s opinion on whether Bevin exceeded his authority by removing Elliott.

In removing Elliott Wednesday, Bevin said KRS needs a “fresh start” and said the board was opposed to transparency under Elliott’s leadership. Elliott was reappointed to the board by former Democratic Governor Steve Beshear last year and his term does not expire until 2019.

Kentucky Retirement Systems is among the worst funded systems in the country. It has an unfunded liability of more than $19 billion.

Kentucky LRC

Analysts say Kentucky will need to hire more state employees or have them pay more into the retirement system in order to reverse the state’s pension crisis, painting a grim portrait of Kentucky’s main public pension system.

Ryan Sullivan says the state will not be able to “invest its way out” of the pension crisis.

“The unfunded liability will actually increase for the first couple of years until salaries can grow fast enough to where this payment grows larger and actually starts to pay down this unfunded liability," Sullivan said.

State Sen. Joe Bowen, a Republican from Owensboro, says that there aren’t many solutions to the crisis.

“There’s obviously only two ways we can do that: employ a bunch more people or require our current employees to pay more,” Bowen said.

In order to remain financially solvent, the state’s annual contribution will have to increase from $560 million in 2015 to $1.4 billion in 2034.

In 2013, lawmakers passed pension reforms which moved new state workers onto 401(k)-style plans and tweaked the tax code to generate more money for the system.

But pension officials say the system still needs more money.

The state has hired another firm to conduct an actuarial audit of Kentucky Retirement Systems.

The Kentucky Chamber of Commerce wants a full performance audit of the troubled Kentucky Retirement Systems.

Chamber President Dave Adkisson Thursday called on state Auditor Adam Edelen to look into KRS, which is rated as one of the most underfunded pension plans in the nation, with only about 45-percent of the assets needed to cover its retirement obligations.

Adkisson said his group is especially concerned about the burden placed on the actuary who advises the system.

“The assumptions they make lead to KRS recommendations, and a request for money that goes to the Governor,” Adkisson said during a conference call with reporters. “The Governor has to utilize that information to build his budget that goes to the legislature, and all of this is predicated on the assumptions of one actuary. And KTRS, the teachers’ retirement system, uses the same actuary.”

Adkisson says a KRS audit should also look into the amount of investment fees paid by the system, and how that compares to other states. An estimated 30-percent of KRS investments are held in hedge funds and private equity funds, which charge high fees and whose holdings KRS agrees not to reveal.

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