Politics & Government

Matt Bevin wrongly tried to conceal the flaws in his pension plan, judge says

Gov. Bevin says pension relief bill is ready

Gov. Matt Bevin told reporters Tuesday that a bill is ready for lawmakers to consider on how to provide pension relief to regional universities, mental health centers and other quasi-governmental agencies.
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Gov. Matt Bevin told reporters Tuesday that a bill is ready for lawmakers to consider on how to provide pension relief to regional universities, mental health centers and other quasi-governmental agencies.

Gov. Matt Bevin improperly withheld a financial analysis of his proposed overhaul of Kentucky’s pension systems in late 2017 that showed his 505-page draft bill would have made the massive fiscal shortfall even worse, a judge has ruled.

According to the still-secret analysis, enacting Bevin’s pension changes would have delayed by four years the schedule by which the Kentucky Retirement Systems reached full funding levels, wrote Franklin Circuit Judge Phillip Shepherd, who was permitted to review the document in his chambers.

Likewise, Bevin’s changes would have forced employer contribution rates to go higher for longer than the current KRS plan of simply paying the full actuarial required contribution every year, Shepherd said.

“Though the actuaries do not express opinions about the merits of the proposal, the numbers do not lie,” Shepherd wrote in a decision handed down Thursday.

“While the actuarial study of the governor’s proposal may be embarrassing to the administration in that it reveals substantial fiscal and economic problems with the governor’s proposal, the Open Records Act requires disclosure even if it causes ‘embarrassment to public officials or others,’” Shepherd continued.

Shepherd ordered the state budget office to release the analysis, prepared by consulting firm GRS, to Ellen Suetholz, a former state government attorney and member of the Kentucky Public Pension Coalition.

The Bevin administration will appeal the decision, general counsel Steve Pitt said in a statement.

“Judge Shepherd clearly erred in holding that a preliminary draft report, prepared for a bill that was never introduced, is subject to disclosure under the state Open Records Act,” Pitt wrote. “Under that theory, all documents prepared by state employees would be open to inspection by the public, and the Open Records act would be rendered a virtual nullity.”

“Equally as egregious, his disclosure and personal characterizations of the report (provided to him in camera — i.e. in confidence, for his eyes only) were improper under any interpretation of the law of Kentucky,” Pitt said.

However, the public pension advocate who requested the analysis said she remains confident she will prevail.

“I’m thrilled,” Suetholz said when reached by phone. “This public has a right to know the full story about these changes that are being proposed to our pension systems. When the analysis was not released — when we were told we could not have it — we assumed the numbers were bad for the governor. And just based on some of the judge’s comments, it sounds like we were right.”

In October 2017, Bevin offered a draft bill containing sweeping benefit cuts to the pension systems for state and local government employees and school teachers. He said he hoped to call the legislature into special session to pass it.

The legislature didn’t meet until its next regular session began in January 2018, and it rejected Bevin’s plan. But the governor continues to promote several ideas contained in his 2017 draft bill, such as putting newly hired public workers into defined-contribution accounts, shifting the burden to them to save enough for retirement.

Many people at the time wanted to know how much Bevin’s draft bill would cost the state and how much it would save — information typically offered in an actuarial analysis.

The Teachers’ Retirement System of Kentucky released its actuarial analysis of Bevin’s plan, showing that the draft bill would cost $4.4 billion more over 20 years when compared with the status quo of simply maintaining the current pension system with full funding.

But unlike the teachers’ system, the KRS board is dominated by gubernatorial appointees, including John Chilton, the state budget director. Chilton and the board refused to release the analysis conducted for KRS, prompting Suetholz to file a request under the Open Records Act.

The attorney general’s office ruled that the KRS analysis should be made public, but Chilton sued Suetholz to block that decision.

In his order this week, Shepherd said Kentucky’s $37 billion pension shortfall is a critical issue that deserves as much information to be made public for citizens as possible.

“The Open Records Act requires that this public debate be fully informed by all available relevant data, including the actuarial analysis of the governor’s publicly disclosed recommendations, when that study was paid for by the taxpayers,” Shepherd wrote.

“The legislature needs this analysis. The board of the Kentucky Retirement Systems needs this analysis. Public employees need this analysis. There is no valid basis under the Open Records Act to hide it from public scrutiny,” the judge wrote. “The court therefore finds that any interest in nondisclosure — and the court can identify no valid interest — is outweighed by the significant public interest in disclosing the actuarial analysis.”