A bill to bring more transparency and oversight to the state’s retirement systems now heads to Gov. Matt Bevin for his signature after the Senate concurred with the final bill Monday.
Senate Bill 2, sponsored by Public Pension Oversight Board co-chair Sen. Joe Bowen, would bring more transparency and oversight to the state’s retirement systems by making changes to board structures including gubernatorial appointments and requiring the systems to follow KRS Chapter 45A, the model procurement code, with a new compromise made with the systems that exempts their investment contracts.
The Kentucky Chamber is a strong supporter of Senate Bill 2 and other legislation to bring more transparency and accountability to the pension systems as the state seeks to solve the issues of the woefully underfunded systems. Read more about the bill here.
On the same day, a meeting of the Public Pension Oversight Board (PPOB) showed a bleak outlook on the funding situation of the retirement systems.
As some of the state’s retirement plans continue to not meet investment return assumptions, presenters discussed what it would mean for the systems if the assumed rates of return was lowered.
For KERS, the lowest funded pension plan in the state, lowering the assumed rate of return to 5.75 percent from the current 6.75 percent would result in the funded ratio to go down to 14 percent and increase the actuarially required contribution (ARC) by around $36 million.
The governor has maintained that the pension systems are in a lot worse shape than people believe because the correct numbers are not being used to calculate how big the problem really is. Watch Gov. Bevin’s exclusive interview with The Bottom Line on pensions here.
Legislators expressed frustration at the PPOB meeting over the actions of past governors, General Assemblies, and pension system boards for the problem the state currently faces.
Chairman Bowen said he wants the taxpayers to understand that they are “just now getting all the facts” and are left to dig out of this hole caused by previous actions.
Presenters, however, ended the meeting on a positive note stating that the systems have been closer to meeting their assumed rate of returns in the first six months of the fiscal year with KRS getting at 5.25 percent rate of return and Kentucky Teachers’ Retirement System (KTRS) hitting a 5.75 percent rate of return.