Two members of the former Kentucky Retirement Systems Board of Trustees are suing Gov. Matt Bevin, claiming Bevin did not have the authority to remove board chairman Thomas Elliott of Jefferson County from the panel.
Elliott and board member Mary Helen Peter filed the lawsuit Friday in Franklin Circuit Court. They are seeking a temporary injunction to block Elliott’s removal. The case has been assigned to Franklin Circuit Judge Phillip Shepherd.
It was not immediately clear what effect, if any, Bevin’s executive order last Friday to abolish the board and replace it with a new board will have on the lawsuit. Bevin replaced the 13-member board on Friday with a larger 17-member board. Eleven trustees will be appointed by the governor, including four to newly created positions.
The six trustees who are independently elected by public employees and retirees, including Peter, will remain on the board, according to Bevin’s order.
The KRS board oversees $16 billion in assets for the retirement benefits of about 350,000 people employed by state or local governments and the Kentucky State Police. It faces about $35 billion in unfunded liabilities, due largely to the failure of state government to contribute recommended sums over most of the last two decades.
At Bevin’s urging, an audit of the state pension system is set to begin in coming months.
“Gov. Bevin is taking the critical steps to fix our $35 billion pension crisis by adding experts with significant investment experience and bringing much-needed transparency to the process,” said Jessica Ditto, Bevin’s communications director. “Mr. Elliott has a history of ethical violations and political favoritism. His lack of transparency and poor leadership has put the retirements of state workers at risk.”
Ditto said Elliott had to pay a $500 fine for a civil violation found by the Kentucky Registry of Election Finance.
That occurred in 2012 when Elliott was co-chairman of Louisville Mayor Greg Fischer’s inaugural committee. He failed to report with the state his position as the committee’s co-chair. Ditto’s attorney said Monday that has nothing to do with the lawsuit.
“He should drop his political lawsuit and respect the governor’s reorganization powers, which former Gov. Beshear used over 100 times in 8 years,” Ditto said.
Elliott was appointed to the retirement board by former Gov. Steve Beshear and then reappointed in 2015 for a term to expire March 31, 2019. He has been chairman of the board since April 17, 2014. Peter was elected as a board trustee by members of the Kentucky Employees Retirement System for a term to expire March 31, 2018.
Attorney General Andy Beshear issued an opinion last month, which said the governor is prohibited from removing a retirement systems trustee prior to the end of his or her term.
It also noted that a trustee shall serve a term of four years and said Bevin’s replacement for Elliott, William F. Smith of Madisonville, was not qualified. Smith later declined the appointment.
Elliott said in his 26-page lawsuit said Bevin’s chief of staff, Blake Brickman, and two uniformed and armed state police troopers were present at the May 19 meeting. He said this was their first attendance at a board meeting.
Elliott said he was escorted to the executive director’s office by Personnel Cabinet Secretary Thomas Stephens and Brickman, the door to the room was shut and he was told by Brickman “in no uncertain terms the following: he was not going to be attending the meeting, he was not on the board, he was not the chair, he was not going to vote or otherwise participate in the meeting, he was not going to sit with the board and he would immediately be arrested by the state police for ‘disrupting a public meeting’ if he attempted to participate in or speak at the meeting in any way.”
Elliott said he later told several board members what had happened and he sat in the back of the room for the rest of the meeting.
Elliott’s suit asks the court to find that Bevin violated the Kentucky Constitution and to declare the governor’s executive orders regarding the board null and void.
He also is asking that Peter and he be awarded any and all other relief to which they may appear entitled, including their attorneys’ fees and costs.
They are being represented by Kevin L. Chlarson, an attorney with the Louisville firm of Middleton Reutlinger.
The next scheduled meeting of the full board is Sept. 8.
In a statement, Attorney General Beshear questioned Bevin’s “unprecedented actions” Friday, citing the governor’s decisions to remake both the KRS and University of Louisville governing boards.
“Lawmakers mandated that these boards be independent,” said Beshear, who said his office is reviewing Bevin’s actions.