FRANKFORT, Ky. (KT) - Separation of the County Employees Retirement System from the rest of the Kentucky Retirement Systems dominated the discussion during a meeting of the KRS Administrative Subcommittee on Monday.
Three options discussed by both CERS and KRS officials are keeping things the way they are, giving CERS some autonomy or a complete separation from KRS.
Bryanna Carroll, director of Governmental Affairs for the Kentucky League of Cities and a separation advocate, said they have over 20 employer and employee groups who favor going their own way, because they are underrepresented when it comes to investments and decision-making powers.
“CERS is 73 percent of the assets and 63 percent of the memberships of KRS,” she said, “We are only 35 percent of the board representation.”
She adds the second option is something they are willing to explore. “We just to make sure that it’s not a board in name only, that there is true authority on investments and decision-making regarding the assets and for our members.”
David Eager, executive director of Kentucky Retirement Systems, had a different opinion on the subject. “We continue to maintain that the optimal solution to this problem is to do nothing,” he said. “Our KRS governance structure works effectively, serves the members well, it runs efficiently.”
Eager expressed concerns about additional costs and duplication of services to both KRS and CERS, if there was a complete separation, and says they would also be willing to continue to meet and explore the second option.
While CERS separation has been discussed for at least a decade, Carroll said it would require the enactment of complex legislation before it could occur. “Senate Bill 226 from a couple years ago, which was our separation bill, took almost a year to write and was almost 390 pages long.”
That bill, introduced during the 2017 General Assembly, did not make it on to the Senate floor.
Meanwhile, one leading lawmaker says it’s important that lawmakers act on pension legislation when they return on Thursday for the final day of the General Assembly.
House Bill 358 has cleared both chambers, but the House and Senate have not yet agreed on which version to approve, according to Sen. Jimmy Higdon, R-Lebanon and Co-Chair of the Public Pension Advisory Board.
He says they must come to a resolution “whether it’s passing one of the options approved by the chambers, tweaking what’s there, or freezing the 49 percent rate.”
Public universities, quasi-governmental agencies and local governments all face an 83 percent pension rate to help make up the unfunded pension liability, which is in excess of $43 billion. They froze the rate at 49 percent through this coming June, and it will nearly double unless legislators intervene.
The bill also contains a mechanism for those agencies to opt out of the plan by paying a lump sum figure or through an installment plan depending on which version of the bill is approved.
Higdon says there is another consideration when passing a bill on the final day of the session.
“We have no veto override on this. I’m sure we will consult with the governor to pass something that he will not veto. There will be a lot of discussion; a lot of discussions.”
According to Higdon, no conference committee has been selected yet for HB 358, but there have been a lot of talk between the House and Senate members responsible for the two versions.
“Rep. James Tipton [R-Taylorsville] and Sen. Christian McDaniel [R-Taylor Mill] have had a lot of discussions on where they can find common ground. It’s important we find a resolution. It’s an important bill, but the answers are just ugly or uglier. There’s no easy answer to this issue.”
Higdon added, “Thursday is going to be an interesting day, an interesting day. I don’t expect us to be out of here any time before midnight.”