Kentucky’s County Employees’ Retirement System (CERS) is not satisfied with the representation it has on the Kentucky Retirement Systems’ (KRS) board, and has put forth new legislation that would establish a separate board for the system.
Local online newspaper Kentucky Today reported that a 215-page bill has been drafted to propose CERS receive its own independent board and that the two CERS and Kentucky Employees Retirement System (KERS) boards would report to a newly formed “Kentucky Public Pension Authority” that would provide administrative and personnel needs necessitated by the two boards.
“By creating an independent board, the Kentucky League of Cities and other agencies that support separation believe decisions can be made that are in the best interest of CERS, instead of the struggling Kentucky Employees Retirement System,” the Kentucky League of Cities wrote on its website.
“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,” Bryanna Carroll from the Kentucky League of Cities told the KRS Administrative Subcommittee on Monday.
According to Kentucky Today, Carroll stated that CERS has 76% of the assets and makes up 64% of the KRS membership, however it only has 35% of the seats on the KRS board, 14% on the actuarial subcommittee, and 11% on the investment committee.
KERS is approximately 13% funded and is regarded as one of the lowest-funded state pension plans in the United States. Spectrum News 1 reported last October that CERS claims to be approximately 60% funded.
The concept of creating an independent board has been in progress for some time, and last year, the Kentucky League of Cities reported that the group has until March 13, 2020, to come up with a proposal.
Recently, some state legislators pushed a bill that would see their pensions, which are currently governed by the Legislators Retirement Plan that is 99% funded, switch to the KRS in order to “align their interests” with that of their constituents under the ailing pension system.
Kentucky Gov. Andy Beshear’s two-year budget proposal would reduce the amount of contributions pegged to KRS.
“Under Gov. Beshear’s plan, $110 million more for the [agencies] is going to the Kentucky Employees Retirement System in each of the next two years compared to the last budget,” said Crystal Staley, a spokeswoman for Beshear. “The governor’s plan will result in an 84.41% employer contribution rate, which is about $25 million shy of the 93.01% rate, but is much greater than the 49.47% being contributed now.”