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A bill that would have enacted transparency measures for Kentucky’s ailing pension systems failed to pass this legislative session, despite a last-minute push.

Some lawmakers say the systems need more scrutiny from the legislature. They’ve criticized hefty fees paid to investment managers and devotion to so-called “alternative investments,” which they’ve said are too risky.

Chris Tobe, a former Kentucky Retirement Systems trustee who has been critical of the system, said investment managers should compete to manage Kentucky’s pension assets in public view.

“We need to have open contracts and some kind of documentation and bidding process. Secret backroom deals is not good government,” he said.

The bill would have revealed how much and to whom the pension systems pay to invest pension funds. Kentucky law exempts the investments from open records laws.

Last fall, the Kentucky Retirement Systems Board of Trustees reported that its annual investment expenses are running 75 percent higher than reported in previous years.

About 35 percent of KRS’ assets are held in “alternative” investments like real estate and funds investing in oil and gas leases, which often come with hefty fees paid to investment managers.

In its state budget this year, the legislature agreed to set aside about $1.2 billion to shore up the pension systems.

Tobe said putting more money into the systems is necessary, but the contracts and management of the systems need to be fixed, too.

“The question is, do you want to throw more money into a system here that’s just bleeding this stuff out to all these Wall Street guys?” he said.

One of the pension funds managed by Kentucky Retirement Systems — the non-hazardous fund, which includes most state workers — has only 17 percent of the money it needs to make future investments. At 45 percent funded, Kentucky Teachers Retirement System is doing slightly better, but still requires massive infusions of cash from the state every year.

The state Senate approved a bill this session that would have subjected the retirement systems to the state procurement code, which requires contracts to be competitively bid out. The bill would have also required appointees to retirement system boards to be reviewed by the Senate and placed pension system employees under the state personnel system. Those measures were removed in a last-day effort to push the bill through the House.

Rep. James Kay, a Democrat from Versailles, filed an amendment to the bill that would have removed the requirement for the systems to post investment information online, instead only allowing the information to be viewed by the state auditor, governor and lawmakers.

“I saw the bill floundering, and I tried to revive it in some sort of way, bring the two sides together,” Kay said.

On the last day of the legislative session, Senate leaders attempted to revive the bill by lumping it with language from an Area Development District oversight bill that the House favored, and also taking out some of the controversial provisions. But the bill still languished in the House.

Kay said the legislature needs to address the issue in the future.

“We do need some transparency aspects, we need to see if, for example, these hedge funds are just making us pay outrageous fees and commissions that are basically tanking our returns,” he said.