Northern Kentucky mayors and Kentucky League of Cities support separating CERS from KRS with pension systems in crisis

10/16/2017 01:38 PM

TAYLOR MILL – The mayors of 14 cities in Kenton County, along with the Kentucky League of Cities (KLC), want Gov. Matt Bevin and the General Assembly to protect the pensions of Kentucky’s local government workers by allowing the County Employees Retirement System (CERS) to separate from the Kentucky Retirement System (KRS).

Taylor Mill Mayor Dan Bell, who is one of the 14 mayors to support the proposal and is a board member of KLC, likes the fact that Gov. Bevin and legislators are looking to address the issue, but also wants everyone to recognize what’s at stake if the CERS pension issues are not dealt with effectively.

“It became obvious that most of the cities in Kentucky might be subjected to obviously increases in their pension contributions,” Bell said. “This became somewhat alarming so we’re trying to work with KLC to try to come up with a resolution that’s both palatable to the cities as well as the state.”

The mayors say that the county employee system has 73 percent of the assets managed by KRS and 63 percent of the membership.

CERS pays 63 percent of KRS administrative expenses which total $22 million – a much higher per person cost than other systems in Kentucky that are managed by their own boards.

“That’s why we feel that we need to be involved from a policy standpoint to work with the KERS to try to equalize the oversight of the committee,” Bell said. “For example, out of a 17-member committee, the CERS has only has 6 members of that 17-member board, so in order for us to have a greater input, I think it’s imperative that CERS has a greater representation on any board that might be established going forward, if, in fact, the legislature’s desire is to not split with CERS and KERS.”

If separation is granted, a new CERS board, free of political appointees, ensuring it is isolated from politics regardless of future administrations, would be established to specifically oversee the CERS funds.

Three of the members would have 10 or more years of retirement management experience, and three would have 10 or more years of investment experience.

“We have proposed a nine-member board that would be split in three different ways,” Bell said. “Three members represented by KLC, three represented by KACO, or the county employees, and three representatives that would be appointed by the state.”

Bell believes that one of the unpleasant realities is the fact that if things remain the same, significant local tax increases or cuts in services will be the rule in many of Kentucky’s cities.

“In northern Kentucky, in the Kenton County area that I’m involved with, there are a few cities that are raising taxes in order to compensate for the amount of dollars which are projected to be increased to fund the pension,” Bell said. “Taylor Mill and Independence, we are not raising taxes, mainly because we are debt free and we’ve been able to hold the line on tax increases, actually the last two years, but yes, I believe that there will be some cities in the state which will have two choices, to either raise taxes, or cut services in some manner.”

Even though he believes separation of KERS and CERS is the best solution, Bell understands why many legislators are apprehensive about separating the two systems.

“I think you have to understand that CERS is one of the better funded plans, along with the legislator’s plan, which is like 80 percent funded, so we’re just looking at what the best answer would be,” Bell said.

Bell says that currently, 3 CERS employees are contributing to one retiree, while in KRS, its one employee contributing to one retiree.


Subscribe to email updates.

Subscribe and get the latest political intelligence delivered to your inbox.