Kentucky CoC President Repeats Call for Pension Performance Review, Questions Bond Plan


In late 2014, the Kentucky Chamber of Commerce called for an extensive audit of the Kentucky Retirement Systems.

Some lawmakers and observers balked at the idea because of the expense it would incur and the recency of the last system review.

But in a new letter, Chamber President Dave Adkisson is again urging lawmakers to conduct a pension performance review. Adkisson also raises questions about the legislature’s plan to issue billions in bonds to fund pensions.

From Pure Politics:

“We strongly urge the legislature to fund this independent review by the State Auditor rather than continuing to rely solely on information provided by the system itself,” [Adkisson] wrote.

The chamber further recommended the establishment of a consensus actuarial group, allowing a review of annual retirement contributions recommended by actuaries hired by KRS, and a mechanism so governors can identify how pension contributions are funded.


The [bond] proposal, House Bill 4, has its skeptics in the private sector, “especially since taxpayers have not had the benefit of vetting such a major initiative,” Adkisson wrote in the letter.

“Simply put, it is difficult to know whether bonding is a good idea or bad idea,” he wrote. “Furthermore, this discussion focuses solely on the funding side and does not include a comprehensive review of the costs and sustainability of the benefits structure over time.

“For now, it would be imprudent for the business community to support such a proposal without a significant amount of open, public deliberation.”

Read Adkisson’s full letter here.


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Kentucky Chamber of Commerce Calls For Audit of State Pension System

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The Kentucky Chamber of Commerce is pushing for an audit of the Kentucky Retirement Systems – specifically, a review of its investment performance and policies.

Reported by the Courier-Journal:

Chamber President and CEO Dave Adkisson announced Thursday that the group wants a review of the investment performance and use of outside investment managers — among other issues — at Kentucky Retirement Systems, which has amassed more than $17 billion in unfunded liabilities.

While the state has made progress in addressing pensions, “serious problems persist that pose a significant threat to the state’s financial future,” Adkisson said. “The business community is concerned about the overall financial condition of our state.”

[State Auditor Adam] Edelen said in a statement Thursday that he shares the chamber’s concerns, but he also noted that at least three major reviews of KRS have occurred over the past few years.


KRS Executive Director Bill Thielen said officials will fully cooperate if Edelen decides to perform an audit. But also he pointed out that the system has been subject to continuous examinations, including audits, legislative reviews and a two-year investigation of investment managers by the federal Securities and Exchange Commission.

“None of those have turned up anything that is out-of-sorts,” he said. “A lot of the questions or concerns that the chamber seemingly raised have been answered numerous times.”

Thielen added that KRS doesn’t disclose the individual fees it pays managers because confidentiality helps officials negotiate lower rates.

State Auditor Adam Edelen said Thursday he hadn’t made a decision on whether to begin an audit of KRS. He said in a press release:

“For this proposed exam to add value and bring about real fixes to the system, it will require broad, bipartisan support and additional resources for our office to conduct the highly technical work…We have begun discussing the matter with stakeholders. No final decision has been made at this time.”

The founder of one retiree advocate group laid blame for the system’s underfunding on the state’s contributions, not investment policy, and was skeptical that the audit would yield fruitful results. Quoted in the Courier-Journal:

Jim Carroll, co-founder Kentucky Government Retirees, a pension watchdog group organized on Facebook, called the proposed audit a “red-herring” and argued that the financial problems in KERS non-hazardous are the result of year of employer underfunding.

He said KRS investments don’t yield the returns of some other systems because the low funding levels force them to invest defensively.

“I’m skeptical that anything useful would come out of another audit,” he said. “Not to say that there shouldn’t be more transparency, but that’s a separate issue.”

KRS’ largest sub-plan – KERS non-hazardous – is 21 percent funded.