In a specially called meeting of the Kentucky House of Representatives Tuesday, House Speaker Greg Stumbo said a recent meeting of the Public Pension Oversight Board presented “shocking” numbers on the investment returns of the state’s pension system and questions need to be answered.
Stumbo said the purpose of the special House meeting, which was called on Friday and boycotted by House Republicans, was to present facts to members about the pension crisis so they can answer questions from constituents who are “alarmed” by the “bad publicity” on pensions they are seeing.
The meeting started with a speech from Stumbo, who cited a story from the Lexington Herald-Leader pointing to the “doubling down” of investments by the Kentucky Retirement System (KRS). The story notes that two of the members of the KRS investment staff have worked for a company called Prisma Capital Partners, and the system’s board has now invested $700 million in the Prisma fund even though it is among the lowest performing in the system’s investment portfolio.
Stumbo said this information raises “major questions” and while he is “not saying anyone did anything wrong,” he said it “doesn’t look right to him.”
The House Speaker went on to say that he believes the legislature has done a good job of learning about the pension problems over the last ten years but there is much more to know and do in order to address the issues within the systems.
After the speech from Stumbo, members of the House Democratic caucus were briefed on pension investments and where the systems stand financially by LRC staff.
Upon hearing the presentation, Stumbo also asserted that the additional General Fund money allocated to the system in addition to the full actuarially required contribution (ARC) has already been lost by the system due to the underperformance of their investments.
Only one House Republican member, Rep. Jim Stewart, was in attendance at the specially called meeting after the GOP caucus announced Monday that they would boycott the meeting which they called “pay-to-play politics,” pointing to a fundraiser scheduled for House Democrats Tuesday evening.
“We are in this hole because of wasteful spending in the past by Greg Stumbo and House Democrats,” Hoover said Monday. “While I agree these are important issues, I don’t think spending more than $30,000 in taxpayer dollars to bring members to Frankfort for a meeting we know is going to accomplish nothing is a good use of taxpayer dollars.”
At the meeting Tuesday, Stumbo said he is “deeply concerned” with Hoover’s statements “trying to politicize” the meeting but said the Herald-Leader story about investment returns proves why the briefing was necessary.
Stumbo also stated that members did not have to be paid for their attendance at the Monday meeting, but he did feel the presentations were well worth the time and expense.
House Democrats were also briefed on the new Medicaid waiver recently submitted by the Bevin administration to the federal government which seeks to make changes to the Medicaid expansion.
Stumbo said they were not there to debate the waiver but, again, to learn more about the issue in order to answer questions from constituents.
LRC staff explained details of the waiver to members of the House in a presentation. Learn more about the waiver on The Bottom Line here.
The Governors Order and SB(2) contain the answer- have managers comply with CFA Asset Manager Code of Conduct. Too bad KRS continues to defy the Governors order, and has bought at least 3 investments in violation of this law.