FRANKFORT, KY— With pensions set to be the focus of a major lawsuit between Attorney General Andy Beshear and Governor Matt Bevin, lawmakers are paying extra attention to the state of the public pension fund. In a special committee meeting, lawmakers from both sides of the aisle heard from accountants about how the various public pension funds are doing.

" /> FRANKFORT, KY— With pensions set to be the focus of a major lawsuit between Attorney General Andy Beshear and Governor Matt Bevin, lawmakers are paying extra attention to the state of the public pension fund. In a special committee meeting, lawmakers from both sides of the aisle heard from accountants about how the various public pension funds are doing.

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Pension board demands transparency during committee review

08/27/2018 07:46 PM

FRANKFORT, KY— With pensions set to be the focus of a major lawsuit between Attorney General Andy Beshear and Governor Matt Bevin, lawmakers are paying extra attention to the state of the public pension fund. In a special committee meeting, lawmakers from both sides of the aisle heard from accountants about how the various public pension funds are doing.



Overall, the reports of the pensions were positive, but it wasn’t all good news.
There are three different types of state pension funds- one for state employees, one for teachers and then a third for the judicial branch- which includes legislators.
The Executive Director for Kentucky Retirement Systems, David Eager, stared his presentation with a quote from Alice in Wonderland to put into reference how the pension fund is doing.
Quoting from the book, Eager read “Here we must run as fast as we can just to stay in place. If you wish to go anywhere, you must run twice as fast as that.” He then added, “I think that’s what a lot of us in the pension fund business face, and running as fast as we can is not going to get us there. We need to run faster. I think we are making progress.”


Eager then explained what that means in numbers. He said, “The markets are good, and we had an Alpha, which made it a good year for us. Up and down, depending on the pension, 7 and a half to mid mine percent level. That follows a 13 percent year the year before. So, we’ve had two really good years back to back.” For those not in the accounting business, he explained, “Alpha, if you are not an investment person, Alpha is what you earn over and above the benchmark. So, if the benchmark were the S & P, and you were in a percent above the S & P, you’ve created Alpha, some positive return.”
He then added, “So we had 7/10th percent Alpha in the funds. That’s worth about $120M and that’s nothing to sniff at. I mean, the investment group added $120M to the market benchmarks we use. $120M is great, but when you’re $27M unfunded, it only puts a small dent in it. So, one of the messages we keep saying, is we’re not going to earn our way out of this. I mean, it’s not to say we should be negligent in our duties, we’re just not going to earn- we need funding from external sources.”
Another problem Eager brought up is that Senate Bill 2 from 2018 requires transparency about the pension funds the state picks up.
However, some of the contracts the state signed before that bill say the pension board can’t say what is included in them.
That’s when Democratic representative James Kay from Woodford County got a little heated, saying “There are over one hundred contracts that are not disclosed on the website. One hundred contracts that the people who have our money, they can’t see- which is out of compliance with SB2. There are many, many contracts that are overly redacted. It looks like somebody just took a black Sharpie through a lot of them. I know, because I’ve looked.” Kay then added, “I agree with you sir [Eager], that the trade-secret disclosure is a bunch of garbage. They don’t want to keep trade secrets from going out and spoiling all their profits all over America, they want to keep it secret so people don’t know they’re ripping us off.”


Showing slides of their finances Deputy Director of the Teachers’ Retirement System, Beau Barnes explained, “This next slide shows where our assets stand now. We have assets of about $21B in pension and health and life insurance trust. And that’s the most we’ve ever had. Again, very positive news there.
After listening to the reports, Senator Joe Bowen said now it was up to the state legislature do do its due diligence and see if the rates of return reported at the review are accurate.
He also said he wants to see the amount of funding in each account quarterly.

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