FRANKFORT, Ky. — A proposal that the 2020 General Assembly consider adding the state treasurer to its Public Pension Oversight Board was one of 10 recommendations approved Monday by the board.
Current board membership includes representatives of the governor, state auditor and attorney general but none from the state treasurer’s office despite that agency’s involvement with the public pensions systems, said Sen. Jimmy Higdon, R-Lebanon, one of the board’s co-chairs.
“The treasurer is also involved in the retirement systems, so (it’s) a recommendation that the treasurer also be added,” Higdon said.
Another recommendation approved by the board would add state legislators as non-voting members to the boards of the Kentucky Retirement Systems and the state Teachers’ Retirement System. Doing so, said Higdon, would help educate legislators about the state’s complex pension issues.
“We need all 138 members to understand (pensions), but if we can have several that really get a deep dive into pensions, the better off the General Assembly will be when it comes to pension issues,” he said.
Moving the state pension systems away from what fellow board co-chair Rep. Jim DuPlessis, R-Elizabethtown, called a “percent-pay model” to a “liability-based model” was another recommendation approved Monday. DuPlessis said the change would incentivize agencies to keep employees in the pension systems by assigning each entity their actual pension liability.
DuPlessis has pre-filed legislation for the 2020 Regular Session that he says could bring some of those changes about.
“What you’ll see, I hope, is (some) agencies which would be your rape crisis centers, your spousal abuse centers—they’re about a 31 percent of pay, is what they’re actually liability is. So when we have them at 49 percent, that’s higher than their actual liability is. And they’re about to move to 93 (percent),” he said. “So this is a fair way to assess liability to those who really own it.”
Other recommendations approved by the board involve: improving the pension systems’ ability to absorb “large shocks” caused perhaps by investment or assumption changes; payment of KRS retiree costs affecting individuals with service in multiple state retirement systems; examination of the level of retiree health and pension fund requests for TRS; and funding of the actuarially-required contribution (ARC) of all state-funded pension systems by the General Assembly, among others.
The PPOB tabled a few proposed recommendations, including a proposal by Rep. Joe Graviss, D-Versailles, to consider removing pension legislation enacted with the passage of 2018 Senate Bill 151 from Kentucky’s statutes. The legislation was declared unconstitutional by the Kentucky Supreme Court late last year. Those proposals will be heard at a future meeting, said DuPlessis.
All approved recommendations will be included in the board’s 2019 annual report. The report was approved by the board, as required by statute, and will be published in coming days