Kentucky's largest public pension plan has a history of transparency problems.
Not so long ago, the Kentucky Retirement Systems' board of directors didn't even know the salaries of agency employees. From mid-2007 through the end of 2010, minutes of the board's meetings weren't transcribed, much less presented for approval at subsequent meetings.
Reforms enacted recently were supposed to bring change to the secretive KRS. But any change that has occurred has been insufficient, as evidenced by the agency's denial of the Herald-Leader's Open Records Act request for the individual fees it paid to outside investment agents in 2013.
KRS paid $55 million to those agents last year, with $31 million of the total going to managers of hedge funds, private equity funds, real estate and other high-risk "alternative investments."
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Recently, KRS agreed to write off half of the $24 million it invested in The Camelot Group, a private equity fund whose managing director faces criminal charges for diverting nearly $10 million of the fund's money for his personal use.
These high-risk investments led the city of Fort Wright to file suit against KRS asking that the city's share of pension assets be more conservatively invested. The suit also seeks the same disclosure of individual fees paid to investment agents the Herald-Leader requested.
Forgive the repetition, but KRS is a "public" pension plan, funded nearly exclusively by contributions from state and local governments and the employees of those governments. Contributions that began as tax dollars. So, every taxpayer in the state has a legitimate interest in and a legitimate right to know how KRS is spending those dollars.
A comprehensive revision of pension law applying to KRS enacted last year created the Public Pension Oversight Board comprised of lawmakers, legislative and gubernatorial appointees, the state budget director, state auditor and the attorney general. It has the authority to require KRS "to provide any and all information necessary to carry out the duties of the board."
If individual fees paid to investment managers don't qualify as "necessary" information for carrying out the board's duties, the oversight panel won't be providing much oversight. So, it should require KRS to provide this information and then share it with the public.
In addition, one of the oversight board's duties is to conduct a semiannual review of KRS investment programs. When the board, which held its first meeting in December, gets around to this review, it might want to seriously consider the wisdom of a pension plan already facing an unfunded liability in excess of $17 billion making high-risk "alternative" investments.