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Auditor Harmon releases audit of KY Retirement System in advance of planned special session

By Tom Latek
Kentucky Today

FRANKFORT, Ky. (KT) – As Gov. Matt Bevin and lawmakers try to come to an agreement on legislation to shore up the pension system for universities and quasi-governmental organizations for a planned special session, State Auditor Mike Harmon released an audit on Thursday of the Kentucky Retirement Systems.

“This audit report gives every state and local government agency, and others in KRS, an idea of what their share of the pension and other post-employment benefits liabilities are to the retirement systems,” Harmon said. “This is essential in allowing agencies to prepare future budgets accordingly, and also gives the General Assembly a better idea about how pension and post-employment costs are impacting the individual participating state agencies, county governments, universities and other quasi-governmental agencies.”

Auditor Mike Harmon releases audit of Kentucky Retirement Systems. (Kentucky Today photo)

Of the $13.6 billion in net pension liabilities for the Kentucky Employees’ Retirement System non-hazardous system for Fiscal Year 2018, the top five employers with the largest pension liability by amount are:

–$1.57 billion: Kentucky Transportation Cabinet, Department of Highways

–$1.5 billion: Cabinet for Health and Family Services, Department for Community Based Services

–$469.8 million: Administrative Office of the Courts (AOC)

–$445 million: Kentucky Unified Prosecutorial System

–$405.7 million: Justice and Public Safety Cabinet, Department of Juvenile Justice.

The six participating universities and the Kentucky Community and Technical College System have a combined liability of more than $1 billion in the KERS non-hazardous system alone.

More than $505 million in pension liabilities were reported in the KERS’ hazardous system for Fiscal Year 2018. Of that, $424.7 million is allocated to the Department of Corrections. That equates to 84 percent of the total amount for FY18.

Harmon’s audit report shows over $6 billion in net pension liabilities in FY18 for the non-hazardous system for the County Employees’ Retirement System. From that amount, the top five employers are:

–$471.6 million: Jefferson County Board of Education

–$363 million: Louisville/Jefferson County Metro Government

–$189.7 million: Lexington/Fayette County Urban Government

–$142.8 million: AOC

–$137.8 million: Fayette County Board of Education

More than $2.4 billion in net pension liabilities for FY18 were reported in the CERS’ hazardous system.  The top five employers by amount in CERS hazardous are:

–$670.5 million: Louisville/Jefferson County Metro Government

–$70.4 million: City of Covington

–$59.8 million: City of Bowling Green

–$58 million: Lexington/Fayette County Urban Government

–$45.6 million: City of Owensboro.

“This audit is important to both stakeholders and taxpayers, as it breaks down the liability in dollars of each and every state agency, county government, and other organizations that are under the KRS retirement umbrella,” Harmon said. 

“The audit shows the amount each employer contributes, and the burden each employer has for pensions and other benefits to Kentucky’s main public pension system.”

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One Comment

  1. Bill Adkins says:

    Interesting – especially when considering that liability exploded since 2003. Until 12/2003 KTRS/KERS were fully funded. Fletcher took office and Thayer took office in 12/2003. Four (4) years later both KTRS and KERS were decimated, their assets halved by Republican mismanagement. Beshear took office in 12/2008 and 8 months later, the Bush Great Recession. Imagine if the funds had been healthy how they could have recovered. That’s not to absove the KRS boards that made the poor investments in hedge funds, but then we have Kim Jong Bevin whose ‘solutions” are more expensive than the problems. He won’t even release the actuarial reports of his own study because he knows it exposes him. The only real solution: Pay the damn bill instead of being the Commonwealth Deadbeat.

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