One part of the Steve Beshear’s retirement bill opens a whole set of political questions.
Create a new section of KRS Chapter 42 to establish the Kentucky Public Pension Financing Advisory Commission in the Finance and Administration Cabinet to review investments and financing of the state-administered retirement systems and to provide a report to the General Assembly
The complete text of the section is below:
SECTION 6. A NEW SECTION OF KRS CHAPTER 42 IS CREATED TO READ AS FOLLOWS:
(1) There is hereby established the Kentucky Public Pension Financing Advisory Commission, which shall be composed of the following fifteen (15) members:
(a) The secretary of the Finance and Administration Cabinet;
(b) The secretary of the Personnel Cabinet;
(c) The State Treasurer;
(d) The state budget director;
(e) The state controller;
(f) The Auditor of Public Accounts;
(g) The executive director of the Kentucky Retirement Systems:
(h) The executive secretary of the Kentucky Teachers' Retirement System; and
(i) Seven (7) individuals appointed by the Governor. Of these seven (7) individuals appointed by the Governor, one (1) appointee shall hold the designation of chartered financial analyst (CFA), one (1) appointee shall hold the designation of certified public accountant (CPA), three (3) appointees shall have extensive professional investment experience or pension plan experience, one (1) appointee shall be a member of the Kentucky Teachers' Retirement System or an organization established to represent the interests of employees and retirees participating in the Kentucky Teachers' Retirement System, and one (1) appointee shall be a member of the systems administered by the Kentucky Retirement Systems or an organization established to represent the interests of employees and retirees participating in the systems administered by the Kentucky Retirement Systems.
(2) The secretary of the Finance and Administration Cabinet shall serve as chair of the Kentucky Public Pension Financing Advisory Commission. The State Treasurer shall serve as vice chair of the commission and shall serve as chair in the absence of the secretary of the Finance and Administration Cabinet.
(3) A majority of the entire membership of the Kentucky Public Pension Financing Advisory Commission shall constitute a quorum, and all actions of the commission shall be by vote of a majority of the quorum.
(4) Professional, clerical, and other staffing needs shall be provided by the Office of Financial Management in the Finance and Administration Cabinet.
(5) The Kentucky Public Pension Financing Advisory Commission shall be charged with:
(a) Conducting a comprehensive operational and governance review of the past investments of the state-administered retirement systems. This review shall be completed no later than December 1, 2009;
(b) Examining and recommending appropriate investment benchmarks and investment portfolio strategies, based on investment returns and asset allocations of comparable public pension systems;
(c) Preparing an analysis for the 2010 Regular Session of the General Assembly as to the financial impact of the pension modernization reforms enacted under this Act;
(d) Providing recommendations to the 2010 Regular Session of the General Assembly for a long-term funding strategy for pension and health care benefits, with the goal of ensuring full funding of the actuarially required contributions to the state-administered retirement systems by 2020; and
(e) Providing and filing a report summarizing the findings and recommendations of the commission as provided by paragraphs (a) to (d) of this subsection to the Governor, the Legislative Research Commission, and the boards of the state-administered retirement systems.
(6) Notwithstanding any provision of KRS Chapter 6, 16, 61, 78, or 161 to the contrary, each state-administered retirement system shall furnish any and all investment or investment-related information or data and any actuarial analysis or projections requested by the commission, at no cost to the commission.
(7) The Kentucky Public Pension Financing Advisory Commission shall be dissolved at the conclusion of the 2010 Regular Session of the General Assembly, unless the General Assembly acts to extend the duration of the commission.
(8) In order to carry out this section, the commission may contract for the services of a nationally recognized independent investment advisor with extensive experience advising public pension plans who is capable of reviewing investment benchmarks, investment portfolio strategies, investment returns, and asset allocations of the state-administered retirement systems.
(9) For purposes of this section, "state-administered retirement system" includes:
(a) The Kentucky Employees Retirement System, the County Employees Retirement System, and the State Police Retirement System administered by the Kentucky Retirement Systems and established under KRS 16.505 to 16.652, 61.510 to 61.705, and 78.510 to 78.852;
(b) The Kentucky Teachers' Retirement System established under KRS 161.220 to 161.716;
(c) The Judicial Retirement Plan established under KRS 21.345 to 21.580; and
(d) The Legislators' Retirement Plan established under KRS 6.500 to 6.577.
Now I don’t expect to see brilliance coming from the head honchos at Kentucky Retirement Systems or Kentucky Teachers Retirement Systems.
If things follow course in Frankfort most of the elected and appoint officials will never show up, they will send an assistant to sit in their chair. We've already seen that the State Auditor has been content to sit and ignore this problem so we shouldn’t really expect a lot from most of the Commission members.
But the real question mark here is what will Jonathan Miller do as Secretary of Finance and Administration with this Commission?
Gubernatorial candidate Jonathan Miller had some very definite ideas on what should be done about pension systems in Kentucky.
A year ago Miller had these things to say:
"Irv Maze and I will stand up for our teachers, police, firefighters and civil servants with real reforms. In the Miller-Maze Administration, we will fight for full disclosure of all investment commissions and of all legal fees affecting the pensions systems."
"Just as we will shine light on all aspects of state government so that Kentuckians know they are getting what they pay for, our public employees and their families need to know that their pension systems are managed well. And that includes providing leadership through the Governor's office to manage our overall budget well so that we don't have to divert resources to shore up our retirement systems at the peril of safe streets and a strong education system."
Other reforms Miller proposed for the public pension systems included:
-Posting the names of the chairs of all systems committees on the Web
-Posting times of all full board meetings on the Web at least one month prior to the meetings
-Posting times of all committee meetings on the Web sites at least one month prior to the meetings
-Posting on the Web all minutes of the full boards, as well as committees, within one week of the meetings
-Including State Treasurer and Secretary of State on both the KRS and KTRS boards
-Including the Secretary of Finance on the boards as a voting member and as a member of investment and audit committees
-Making the Personnel Secretary a voting member of the boards and chair of the personnel committees -Opening voting rules for employee representatives and including term limits
-Banning exclusions of board members from any committees
-Full disclosure of investment commissions paid by name of firm and firm's location
-Full disclosure of all legal fees including proceeds from class action suits and attorney of record on class action suits.
“I also call on the Governor to follow the advice of the advocacy groups to provide a real, independent review of the state's pension funds, and to take the tough, immediate action that is necessary. I also call on our legislative leaders, including those running for statewide office this year, to tackle the pension problems in this year's session, instead of pushing them off to future generations."
So if this bill becomes law in its’ current form we will get to see if Miller can walk the walk as the Secretary of Finance or if his statements were just talking the talk by a candidate.