Kentucky Gov. Matt Bevin can move forward with his reorganization of the Kentucky Retirement Systems’ board of trustees, but must restore Thomas K. Elliott as a board member, a Circuit Court judge ruled Monday.
In June, Mr. Elliott, who had been board chairman, trustee Mary Helen Peter and state Attorney General Andy Beshear filed a lawsuit seeking temporary injunctions on Mr. Elliott’s removal and the governor’s further reorganization of the board, until a court ruled on the legality of Mr. Bevin’s actions.
In his ruling Monday, Franklin County Circuit Court Judge Phillip J. Shepherd wrote that Mr. Elliott can remain a board member temporarily, but not chairman, and that Mr. Bevin can continue with his other changes, pending a court decision on the legality of his actions.
On June 17, Mr. Bevin announced the creation of the Kentucky Retirement Systems Board of Directors, replacing the KRS board of trustees. Mr. Elliott, whom Mr. Bevin ordered removed from the board in April citing a need for a fresh start and more transparency, was not listed as a member of the new board of directors, but Mark Lattis, whom Mr. Bevin appointed as Mr. Elliott’s replacement, was. The other 12 current trustees were retained under the new structure, and four members appointed by Mr. Bevin were added.
Also in the restructuring, Mr. Bevin appointed existing trustees John R. Farris and David L. Eager as board chairman and vice chairman, respectively; said any executive director appointed by the board must also be approved by the governor; and mandated that all investment holdings, fees and commissions, contracts or offering documents, be available online.
Mr. Shepherd wrote Monday that the presence of state troopers and warnings of arrest made by officials of the governor’s office to Mr. Elliott at the May board meeting weighed “heavily” in favor of Mr. Elliot’s temporary restoration as a board member.
Regarding Mr. Bevin’s other changes, Mr. Shepherd wrote there is no “irreparable harm” in their implementation, adding the governor has “every reason and right” to require a more open and transparent KRS in light of the system’s funding crisis.
KRS was 41.4% funded in aggregate as of June 30, 2015.
The system’s new board of directors is scheduled to meet Wednesday.
"We are pleased the court has recognized Gov. Matt Bevin's authority to reorganize the KRS board. The new transparency provisions and board members with substantial investment experience are critical to turning around the nation's worst funded pension plan,” said the governor’s office in a statement on Tuesday. "While we disagree with the court's decision to allow Mr. Elliott to serve on the board to which he was never appointed, we are confident the court of appeals will reaffirm that Mr. Elliot is not a member of the new KRS board.”
Mr. Beshear said Monday that his office’s “goal is to move this case to a final decision at the trial court level and ultimately to the Supreme Court of Kentucky.”
William A. Thielen, KRS’ executive director, could not immediately be reached for comment on Tuesday.