The former executive director of the Kentucky Retirement Systems, who Gov. Matt Bevin said “should be in jail,” defended himself Monday, blaming the massive state pension shortfall on governors and legislators who failed for decades to provide the retirement system with enough money.
“The governor’s statements are completely without foundation, totally irresponsible and defamatory,” said Bill Thielen, who led Kentucky Retirement Systens from 2011 to 2016.
In August, Bevin told a conference of local government leaders in Louisville that Thielen should be jailed over the current status of Kentucky’s public pension systems, which face tens of billions of dollars in unfunded liabilities.
“The former head of KRS, the director who oversaw this, is a guy named Bill Thielen,” Bevin said. “Bill Thielen should be in jail, and that’s a fact. And I don’t know who’s here from the media, but if this was a private company, if this was a private pension plan, he would be.”
Bevin never publicly explained what crimes he thought Thielen committed. The governor’s office didn’t respond that day to requests for more information about Bevin’s accusations.
In a lengthy statement Monday, Thielen said Kentucky’s elected leaders failed for 15 of 22 years, from 1992 to 2014, to pay the full “ARC,” or annual required contribution, that was deemed necessary every year to keep the state pension fund solvent. During the same period, state employees made their full contributions to KRS through paycheck deductions.
Thielen said this inadequate funding was aggravated by two economic recessions, in 2001 and 2008, that shrank the pension fund’s investment returns, and by cost-of-living adjustments that the General Assembly awarded to retirees without providing the money to pay for them.
By last year, the primary state pension fund had less than 14 percent of what it’s expected to need to meet future obligations to state retirees.
As executive director, Thielen said, he had no control over state leaders’ decisions to inadequately finance KRS. Nor did he control the agency’s investments, he said. The KRS board of trustees decides where to invest the pension money, based on the advice of KRS’ chief investment officer, he said.
“I have experienced an unblemished legal and administrative career of over 40 years serving federal, state and local governments,” Thielen said in his statement.
“But now my reputation and service at KRS have been tarnished by the unfounded public allegations of Governor Bevin,” he said. “Instead of defaming individuals, blaming the KRS board of trustees and active state workers and retirees, and playing politics, Governor Bevin should focus on developing and recommending a realistic plan to remedy the situation that does not vilify and punish those who are serving and have served the commonwealth well.”
Bevin butted heads with Thielen and stirred controversy with the KRS board in 2016, when he removed chairman Tommy Elliott. Soon after, Bevin issued an executive order restructuring the retirement systems board, adding more governor-appointed members.