By Tom Latek
Kentucky Today
While there is a still a major unfunded liability among Kentucky’s public pension plans, the 2018 fiscal year that ended June 30 was a positive one with $1.4 billion earned in investments, according to testimony presented by plan administrators this week in Frankfort.
David Eager, executive director of the Kentucky Retirement Systems that administers five of the plans including most state workers, city and county employees and Kentucky State Police, began his presentation with a quote from the Red Queen, a character from Alice in Wonderland.
David Eager (left), executive director of Kentucky Retirement Systems testifies before a panel on Monday. (Kentucky Today/Tom Latek)
“Here we must run as fast as we can just to stay in place,” Eager told the Public Pension Oversight Board. “If you wish to go anywhere, you must run twice as fast as that.”
While investments earned KRS $1.4 billion, they still paid out more in benefits than they took in with most of the funds, according to Eager, yet ended up reducing the debt by $120 million. “But when you’re $27 billion unfunded, it only puts a small dent in it.”
While the investments earnings were great, he said, “We are not going to earn our way out of this. We need funding from external sources.” That presumably means appropriations from the General Assembly.
He added, taking a longer view, over 30 years, “We’re moving in the right direction.”
The cash flow was in a better situation for the Kentucky Teachers Retirement System, according to Deputy Executive Director Beau Barnes. The net value of their investment assets rose from $18.5 billion to $19.8 billion during the past year. Factor in health and life insurance trusts and the total assets stands at about $21 billion.
Barnes told the board their rate of return on investments was 10.51 percent last year, which he said ranked them in the top 2 percent of plans nationwide.
The Judicial Form Retirement System, which includes judges and state lawmakers, saw their portfolio increase by 9.43 percent for judges in the defined benefits plan and 9.88 percent for those in the hybrid cash balance plan.
Lawmakers retirement had their investments ride by 9.45 percent for those in the defined benefits plan, slightly below the benchmark figure of 9.77 percent and 9.89 percent in the hybrid cash balance plan, slightly above the benchmark.
Overall, the judicial retirement plan assets jumped to $397.5 million, nearly $26 billion more than a year ago, while lawmakers had the assets go up $7 million to $118 million, as of June 30.
