Gov. Bevin announces selection of firm conducting pension audits
Gov. Matt Bevin announced Monday that the PFM Group has been selected to provide consulting services for a comprehensive review of Kentucky’s state pension systems and present findings about the ailing systems to lawmakers by December 31, 2016.
According to a press release from the governor’s office, The PFM Group has broad consulting experience on pension issues with previous clients including the State of Tennessee and the Lexington-Fayette County Urban Government. The release also noted that contract was awarded through a competitive bidding process and is effective September 15th.
“Reforming the state’s ailing pension systems is one of this administration’s top priorities,” Bevin said. “The findings that will come from this pension fund audit will accurately identify our actual pension liabilities. It is our intention to shine the antiseptic light of transparency on the country’s worst funded pension system and financially secure the pension system for generations to come. Kentucky taxpayers, retirees and current employees deserve nothing less.”
The Kentucky Chamber of Commerce has been calling for a comprehensive performance audit of the Kentucky Retirement System since 2014, with criteria very similar to that laid out by the governor.
The Request For Proposal (RFP) sent out by the Bevin administration earlier this year stated that the primary objective of the pension systems review is to “advise and provide the Commonwealth of Kentucky with complete, accurate, and independent financial and other information relating to the current and projected future financial situation of the Plans.”
As previously reported by The Bottom Line, key points laid out in the RFP to be reviewed in the comprehensive analysis of the Kentucky Retirement System (KRS), Kentucky Teachers’ Retirement System (KTRS), and the Judicial Retirement Plan include:
- “critical” review of past revenues and expenditures to identify reasons for the current financial status of the three plans
- a comparison of state retirement benefits with those offered in the private sector as well as pension systems used in other states
- analysis of defined contribution plans
- evaluation and advice regarding the appropriate actuarial assumptions for each system
- review of all fees and investment arrangements
- assessment of staffing at systems
- evaluation of boards and qualifications
- analysis and recommendations for cost savings and revenue options
- best practices on a number of areas within the pension systems
The PFM Group will need to present their report to lawmakers by December 31, 2016—meaning it could be a hot topic during the 2017 session of the General Assembly.