J. Tyler Franklin

Jim Carroll started working for Kentucky’s state parks system in 1978 making $780 a month.

“So I knew the pay wasn’t good but I knew that it was a place where you could advance over time,” Carroll said. “It was stable, and retirement was part of that.”

Carroll later worked in the tourism cabinet and retired in 2009. Since then, he’s organized a group of concerned state pensioners called Kentucky Government Retirees.

Carroll draws a monthly pension from the retirement system for most of Kentucky’s state workers, Kentucky Retirement Systems. Depending how you measure it, KRS has one of the lowest funding levels in the nation.


Kentucky’s public pension system, which officially faces an $18.1 billion unfunded liability, might be in worse shape than previously thought.

The bigger potential problem for Kentucky Retirement Systems means taxpayers could be on the hook for much more money to honor pension commitments to about 365,000 public employees, the Lexington Herald-Leader reported.

KRS board chairman John Farris told fellow trustees Thursday that KRS made math errors in recent years. The state pension agency relied on overly optimistic assumptions about its investment returns, the growth of state and local government payrolls and the inflation rate, he said.

Kentucky LRC

Legislation aimed at creating stricter reporting requirements to boost oversight of Kentucky's troubled pension systems has cleared the state Senate.

The measure seeks to shed more light on the fees and investment practices of the pension systems. The measure passed the Senate on a 37-0 vote Wednesday and heads next to the House.

Republican Sen. Joe Bowen of Owensboro, the bill's lead sponsor, calls the proposal a "critical first step" to increase transparency and accountability of the pension systems.


An organization of current and retired Kentucky public school teachers has filed a class action lawsuit against Gov. Matt Bevin and legislative leaders for underfunding the teacher pension system, which lost $1.2 billion last year.

The Teachers Retirement Legal Fund says leaders violated state law as well as the U.S. and Kentucky constitutions by not setting aside enough money for the Kentucky Teachers Retirement System, which manages the pensions of about 141,000 school system retirees.

Randy Wieck, a history teacher at DuPont Manual High School in Louisville, said teachers have dutifully contributed to the pension system from their paychecks but the state hasn’t kept its side of the bargain.

“We don’t want to retire into poverty because we don’t have Social Security. So this is all most teachers have,” said “The end result we hope will be the saving of our retirement.”

Kentucky’s troubled pension systems continue their downward slide. Plans covering teachers and state employees lost $1.8 billion this year, bringing the total unfunded liability to more than $32 billion.

David Eager, interim executive director of KRS, addressed the Public Pension Oversight Board this week.  Co-Chairman Joe Bowen, a state senator from Owensboro, says the news isn’t all bad.

"What folks need to understand is that we have seven retirement systems that are publicly funded, and there's actually only one that you would consider to be in dire straits," Bowen told WKU Public Radio.

That pension plan is the Kentucky Employees Retirement System, or KERS, which has only 16 percent of the funds needed to pay the benefits of future retirees. That makes it among the worst-funded public pension plans in the country.

Other retirement plans covering teachers, judges, and lawmakers are in much better shape.

J. Tyler Franklin

Kentucky lawmakers are once again calling for transparency in the state’s pension agencies, which manage the worst-funded public retirement funds in the nation.

Even though legislators on both sides of the aisle agree on some transparency provisions, the issue has taken on a political tone ahead of high-stakes races to determine control of the state House of Representatives this fall.

Last week Rep. James Kay, a Democrat from Versailles, proposed a bill for the upcoming legislative session that would alter how the pension agency for most state workers — Kentucky Retirement Systems — operates. The legislation would make pension contracts and investments public, and require the agency to operate under the same purchasing guidelines as state government.

Kay said the bill would give state employees and the public peace of mind.

“They would better know how their contributions and tax dollars are being invested,” Kay said in a news release. “This system needs less secrecy and more accountability, and my bill provides for both.”


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.

Ryland Barton

Kentucky Retirement Systems board member Tommy Elliott says he didn’t attend a recent meeting of the pension board because he says there was a “dynamic of fear” over whether he would be arrested by state troopers for participating.

Franklin Circuit Court Judge Phillip Shepherd temporarily restored Elliott to the pension board last month after Elliott sued Gov. Matt Bevin for removing him from the governing body three years before the end of his appointed term.

However, Elliott didn’t attend two recent KRS board meetings, prompting the judge last week to question whether Elliott should remain on the board and inviting the governor’s office to move to have the court order him removed.

On Wednesday, Elliott testified that he didn’t attend one of the recent meetings because he was afraid he’d get arrested.


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.

J. Tyler Franklin

Democratic lawmakers criticized one of the state retirement systems’ use of hedge funds after reports showing the practice hasn’t paid off in recent years despite hefty, often secretive fees for investment managers.

“They hide their fees and they have low performance, so what the hell are we doing in hedge funds?” asked state Rep. Jim Wayne, a Democrat from Louisville.

Kentucky Retirement Systems, which manages the pension funds of about 350,000 state workers, has 10.2 percent of its investments tied up in hedge funds. Over the last fiscal year, KRS investments’ declined by 0.5 percent, and the system only has about 17 percent of the money it needs to make future payouts to retirees.

Hedge funds performed poorly last year, with a 5.5 percent average decline in value. Kentucky Retirement Systems spent $123.1 million on fees for investment managers last year.

House Republicans to Skip Tuesday Meeting on Pensions

Aug 29, 2016
Kentucky LRC

House Republicans say they will not attend a special meeting called by Democratic Speaker Greg Stumbo.

The Kentucky House of Representatives adjourned for the year in May. They are not scheduled to reconvene again until January. But last week, Stumbo announced a special meeting of all House members on Tuesday to discuss the state's public pension crisis.

Monday, House Republican leader Jeff Hoover sent Stumbo a letter blaming him for the pension problem. Hoover accused Stumbo of scheduling the meeting on the same day as a nearby Democratic fundraiser, ensuring members would have their expenses covered.

Legislators get $188.22 for each day they work. Stumbo said lawmakers who attend the meeting will be paid.

Stumbo did not immediately respond to a request for comment.

Kentucky LRC

House Speaker Greg Stumbo has called for an impromptu meeting of the state House of Representatives Tuesday to discuss the state’s troubled pensions systems.

The summoning came days after lawmakers received more bad news about the state-managed retirement funds — a 1.3 percent loss on returns into the Kentucky Teachers Retirement System and a 0.5 percent loss on investments in the Kentucky Retirement Systems.

In an emailed statement, Stumbo said Friday he called the meeting because of the poor returns and because the pension agencies are paying what he called “exorbitant placement fees” for investment managers.

“Several members have asked about this issue, and many have gotten questions from their constituents, so I thought this would be the best way to answer their questions and therefore invited the full chamber,” Stumbo wrote.

Stumbo Calls Meeting of House to Discuss Pension System

Aug 26, 2016
Kentukcy LRC

Kentucky's Speaker of the House has called a meeting of all state representatives to discuss the beleaguered public pension system.

An email to legislative assistants obtained by The Associated Press shows Speaker Greg Stumbo said all House members "are invited and encouraged to attend" a meeting at 2 p.m. on Tuesday in the House chambers. The email says members will "discuss several complex issues" and is signed by Stumbo.

Stumbo spokesman Brian Wilkerson confirmed the meeting and said the main focus will be to discuss the state retirement system in light of recent low investment returns. Public pension systems for teachers and state workers have an estimated combined debt of more than $30 billion, making it one of the worst funded pension systems in the country.


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.


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.