FRANKFORT, Ky. (KT) - The County Employees Retirement System has come up with a new proposal to address its concerns over under-representation on the Kentucky Retirement Systems board.
Bryanna Carroll with the Kentucky League of Cities says while CERS has 76 percent of the assets and make up 64 percent of the KRS membership, they only have 35 percent of the seats on the KRS board, 14 percent of the Actuarial Subcommittee and just 11 percent of the Investment Committee.
While CERS has proposed a complete split from KRS in the past, they are now proposing legislation to create a hybrid system, in which the KRS and CERS would have separate boards to administer their own systems. Both of them would be part of a new Kentucky Public Pension Authority that would provide personnel needs and perform other duties agreed upon by the two boards.
“This bill would create a new CERS Board of Trustees that is free of political influence regardless of future administrations while also protecting the state’s pension systems and limiting duplication of services,” Carroll told the Kentucky Retirement System Systems Administrative Subcommittee on Monday
Under the proposal, each of the three organizations would have a nine-member board and the new KPPA would have four representatives each from the KRS and CERS, with the ninth member appointed by the governor from a list of four people submitted by the Legislative Research Commission, who would only vote to break ties.
All three boards would report to the Public Pension Oversight Board, ban the governor from reorganizing, amending or abolishing any board, and would not impact the so-called “inviolable contract” the state has with employees and retirees.
The proposed bill would have the three boards in place by April 1, 2021, with KPPA assuming personnel management by July 1 of that year.
Sen. Jimmy Higdon, R-Lebanon, said he agrees in principal with the idea, but “the devil is in the details.” One of his concerns being, “The current trend is to consolidate efforts, but you’re going away from that trend. Tennessee is a perfect model. There is a group that does all the investments for all of their retirement systems. I’d like to see us have a model of more consolidation.”
He said that would reduce administrative costs, which is a big concern.
CERS has come up with a 215-page draft bill addressing their proposed changes, which is being sponsored by Rep. Russell Webber, R-Shepherdsville, a co-chair of the subcommittee.
According to figures supplied by Carroll, CERS has 248,969 members, both employees and retirees, KERS has 135,046, and the State Police Retirement System another 2,696.