Franklin Circuit Judge Phillip Shepherd late Monday temporarily blocked Gov. Matt Bevin’s removal of Thomas Elliott from the Kentucky Retirement Systems’ governing board but said Bevin can reorganize the board except appointing a replacement for Elliott until a final court decision is made.
Shepherd, in a 20-page ruling, said Attorney General Andy Beshear has raised important and legitimate questions about the validity of the governor’s reorganization of the board, but the court finds for now that he can reorganize it.
“The primary effect of the governor’s reorganization is to add members to the board with financial and investment expertise (which is sorely needed in light of the financial challenges facing the system) and to allow the governor rather than the board to select the board’s chair and the vice chair,” Shepherd wrote.
Shepherd said Elliott, who was previously chairman of the board, may stay on as a member of the board but that the governor’s choice of chairman and vice-chairman will preside.
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“It is undisputed that the chair and vice-chair appointed by the governor in the executive orders are highly competent individuals with significant experience in financial management,” the judge said.
He stressed that the court finds “no harm to the public interest” in expanding the board with additional members who have financial expertise and allowing the governor’s appointments as chairman and vice chairman to take effect immediately.
Shepherd’s order addressed a request by Elliott for a temporary injunction to block changes Gov. Matt Bevin made in the Kentucky Retirement Systems. He was supported by the attorney general’s office.
Elliott’s attorney, Kevin L. Chlarson, said Monday night that he is “happy” with the ruling but it has not yet been determined if his client will appeal it.
Shepherd had held a 36-minute hearing on the request Monday morning.
At the hearing, Brian Thomas, an attorney for the retirement systems, said a ruling was urgently needed, noting that several important meetings of the program that administers state workers’ retirement benefits, are upcoming. Its investment committee is scheduled to meet Tuesday to consider tens of millions of dollars in investments.
Thomas also said a board meeting is scheduled for Wednesday to appoint an interim director to replace the retiring Bill Thielen. His last day on the job is Thursday.
At issue is a lawsuit initiated in June by Elliott and Mary Helen Peter, members of the former Kentucky Retirement Systems Board of Trustees. They claim Bevin, a Republican, did not have the authority to remove Elliott, of Jefferson County, from the panel. Elliott had been appointed by former Democratic Gov. Steve Beshear.
After issuing an executive order removing Elliott from the board in April, Bevin issued another order order to abolish the 13-member board and re-establish it under new rules with 17 members.
Bevin sent state police to a board meeting to threaten Elliott with arrest if he tried to participate in KRS business with other trustees.
Under Bevin’s change, 11 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.
Shepherd, in his ruling, said Elliott “was removed in such a manner as to cast aspersions on his character and conduct without affording him any due process of law.” He said the use of armed police officers by the governor’s office to threaten Elliott with arrest for not resigning was “a flagrant abuse of executive power which is wholly unacceptable in a democratic society.”
The judge said Bevin’s actions “have raised serious questions about the scope of the governor’s power to act unilaterally to remove board members who have been appointed to serve a term of years.”
Until these questions are resolved on the merits, Elliott is entitled to continue as a board member, Shepherd said.