In the final hours of this session the General Assembly has a chance to improve both the management and transparency of Kentucky's troubled public pension programs.
The most likely to become law is Senate Bill 22, which has passed the Senate and now awaits action in the House after passing out of committee there. It requires several state retirement systems — the Judicial Retirement Plan, Legislators' Retirement Plan, Kentucky Retirement Systems and Kentucky Teachers' Retirement System — to establish disclosure policies for their dealings with placement agents.
Placement agents are middlemen who help private investment companies find investors. They have been controversial around the country and in Kentucky, where in 2010 the Kentucky Retirement System's chief investment officer resigned after his relationship with a placement agent who had collected nearly $6 million in fees through KRS business, came to light.
SB 22 says the disclosure must include the name of the placement agent, the amount invested, and fees paid for each investment involving a placement agent. It's an important first step in prying open the too-dark world of our state retirement systems and should become law.
Two other bills that would pull back the cover on shameless legislative self-dealing on pensions have not fared so well.
SB 23, sponsored by Senate Floor Leader Damon Thayer, R-Georgetown, and Sen. Chris McDaniel, R-Taylor Mill, who is running for lieutenant governor, attempts to address the system that allows part-time legislators who take highly paid full-time state jobs after they leave the legislature to reap huge pensions. Under a 2005 law, the higher paying job becomes the basis for calculating retirement benefits if the former legislator holds it for as little as three years. Former legislators, like David Williams and Kathy Stein, who retired to take $120,000-plus jobs as judges, stand to benefit handsomely, as do those who are appointed to executive branch jobs.
SB 23 provides legislators a way to declare whether they want to cash in or not, by allowing them to elect to have their retirement salaries based only on state service prior to Jan. 1, 2014. That measure passed the Senate Feb. 11 but has been sitting in the House State and Local Government Committee since Feb. 23.
SB 20, also sponsored by Thayer and McDaniel, has gotten even less traction. It would open information about the retirement benefits of present and former lawmakers to public scrutiny. Now, no state pension benefits are a matter of public record. SB 20 was introduced in the Senate Jan. 6 but has never moved since it was referred to the Senate's State and Local Government committee on Feb. 3.
Sadly, it's no surprise that legislators seem unwilling to either forego or reveal the lucrative pensions available to only them.
However, that is by no means the only issue facing Kentucky's troubled public pensions. The General Assembly can take a step for good by passing SB 22 requiring the retirement systems to provide details on their relationships with placements agents.