I can’t describe the emotion I felt when I learned of the state retirement system board’s decision to keep its current executive director, extend his contract for 30 months and award him a 25 percent raise, to $215,000 annually.
The shock, disappointment and frustration moved me to firmly resolve that this is a line-in-the-sand moment. I said as much at the Oct. 26 meeting of the Public Pension Oversight Board, of which I’m a member. It’s a board created to find a way to prevent the Kentucky Retirement Systems (KRS) from collapsing under $17 billion in unfunded liabilities.
I couldn’t go forward without publicly voicing my concerns for the health of KRS, the taxpayers, the retirees and current and future employees of the state.
The KRS board conducted an expensive national search this year for a new executive director only to settle for the person who has held the position for more than four years, Bill Thielen. We then learned the board members did not interview anyone who applied for the job.
Lawmakers like me need to feel like they can honestly work with Thielen to stop “spiking,” the practice of state employees padding their pay in the years before retirement in order to receive larger pensions.
I’m afraid that working relationship will be strained because Thielen’s pay raise will spike his pension.
Yes, folks, it is a line-in-the-sand moment for me. The KRS board chairman was quoted in The Courier-Journal saying he was not concerned about “blowback” in the legislature.
As fiduciary, the KRS board needs to be concerned with the level of return and the fact that the system is not meeting its actuarial projections. It’s the same fund that reported a meager 2 percent return on investments last year. It’s the same fund that failed to properly report expenses for last year.
And now we learn that in the first three months of this fiscal year, the fund is at negative 4.8 percent. If that would hold throughout the year, that would be worse than the 2008 recession year.
Every penny spent by KRS is money drained from state employee retirement funds. At the end of the day KRS is a little more unsound due to the actions of the board.
I want to make it crystal clear that Thielen’s pay, his raise and the cost of a national search come from the contributions that state employees make every month to the retirement system.
These are the same state employees who only received a 1 percent raise this year. And this is the same fund retirees paid into for years and from which they receive no cost of living adjustment.
The money the KRS board is spending also comes from the required contributions put in by the state. It is also the responsibility of taxpayers to pay any liability created by this fund.
This is why I support legislation in the upcoming General Assembly to make KRS more transparent. One way of doing that would be requiring all appointments to the KRS board be subject to Senate confirmation.
I will also support legislation requiring all contracts of KRS to be reviewed by the Contract Review Committee of the General Assembly. That would mean legislators would get the opportunity to go over contracts KRS signs with law firms, vendors and even its own staff.
The abuses of the system have to stop – now.
Sen. Jimmy Higdon, R-Lebanon, is majority whip and represents the 14th district. Reach him at 270-692-6945 or email@example.com