Kentucky Lawmakers Want Oversight of State Pension’s Investment Contracts

Two Kentucky lawmakers this week filed two proposals that would give the state legislature significantly more oversight and influence over the Kentucky Retirement Systems.

One proposal would put more lawmakers on the KRS board; another proposal would let lawmakers review investment contracts between the pension system and external money managers.

Details from NPR Louisville:

State Rep. Mike Harmon of Danville and Sen. Joe Bowen of Owensboro want to give four non-voting seats on the KRS board of trustees to members of the General Assembly and to require KRS contracts to undergo legislative review.

[…]

Harmon said the bill proposals were to have been filed Wednesday. One would make two state representatives and two state senators ex-officio members of the 13-member KRS board and the nine-member KTRS board. Another proposal would make all appointments to the KRS board subject to Senate confirmation.

“It will be the first step in transparency, to diagnose so that we can eventually fix, and then once we do the fixes we can, we’ve got to fully fund it,” he said. “If we diagnose it and we fix what we can but don’t fund it, then we’ll be right back where we’re at.”

The other main proposal in the bill would remove the existing exemption of KRS and KTRS contracts from review by the legislature’s Government Contract Review Committee. Such contracts include those with hedge funds and private equity funds that insist on the confidentiality of investment contract terms. As a result of that non-disclosure, state retirees can’t learn the precise holdings of those funds — or what those funds charge in fees. About 20 percent of KRS assets are in hedge funds and private equity funds.

Pension officials had not commented on the proposals as of press time.

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