Legislation introduced in the Kentucky General Assembly that would split the board of the $18.3 billion Kentucky Retirement Systems, Frankfort, and transfer administration of the county employees retirement system within KRS to its own new board has been met with opposition from an advocacy group.
The bill, HB 484, would establish a CERS investment committee and separate actuarial valuation requirements for the newly created CERS board to determine employer contribution rates, a summary of the bill on the Kentucky General Assembly website says. The bill would also establish a CERS insurance trust fund for retiree health benefits separate from the KRS insurance trust fund and move CERS assets in the KRS insurance trust fund to the CERS insurance trust fund.
CERS is one of three retirement systems within KRS, which has a 17-member board.
But an advocacy group — Kentucky Government Retirees — says the measure, introduced Tuesday, comes at too high a price: up to $6.7 million. Further, the group says there are less costly ways to address CERS' board representation concerns.
The advocacy group, which represents 15,000 Kentucky Retirement Systems retirees and active employees, said Thursday in a statement that the bill "should be defeated," and "a more practical approach to board representation should be explored."
Creating a separate board "will mean redundant expenditures to hire another group of auditors, investment consultants and actuaries," the statement said. "Investment and custodial fees to manage separate fund portfolios will increase. Chief executive officers would be hired for each of the two boards. The total price tag is estimated at $3.6 million to $6.7 million," the statement added.
"An argument can be made that the current board is top-heavy with gubernatorial trustees. A simple fix would be to do nothing more than change the board's representation. No muss, no fuss, and no spending millions of dollars for a system that needs to hold on to every nickel to ensure fiscal stability," the statement continued.
KRS Executive Director David Eager on Friday declined to comment about his official stance on the legislation but said: "The board, as long as I've been on it, is void of politics. I think all 17 members understand the fiduciary responsibility of the plans and treat them equally."
He added that costs estimates cited by Kentucky Government Retirees came from KRS, and are "likely to be more than that, because we haven't explored all the aspects," of a board split.
State Rep. Russell Webber, a Republican and lead sponsor for the bill, could not immediately be reached for comment.
On Thursday, HB 484 was assigned to the House Local Government committee.