BY JOE RAGUSA KENTUCKY

FRANKFORT, Ky. – For the last year, lawmakers have been examining whether or not the CERS, the retirement system for county and city employees, should split off from the larger Kentucky Retirement System.

The state reports the CERS has about 60 percent of what it needs to cover its future liabilities while other sections of the KRS are doing far worse.

The Kentucky Employee Retirement System for non-hazardous employees is funded at 13 percent, making it one of the worst state-run pensions in the country.

“CERS has maintained that they control the majority of the members on the board, they have more of the financial assets, and also they have said they are at a better financial situation than KERS,” Rep. Russell Webber, (R) Shepherdsville, said.

Webber co-chairs the Kentucky Retirement Systems Administrative Subcommittee, which met Monday in Frankfort.

The subcommittee started researching a potential split last year and it brought in a researcher from Boston College to look at how the composition of the board plays into how successful the pension system can be.

“So we’ve been brining in folks that represent different various perspectives to give us their views on creating a separate board, two separate boards, allowing those boards to operate independently but under kind of the same administrative umbrella,” Webber said.

The researcher, Jean-Pierre Aubry, recommended a few things to a successful pension board, like limiting it to 6-to-10 people, including many with at least 8 years of tenure, plus a couple members with financial experience.

“A well-designed, a purposefully designed board can positively affect the long-term performance of public plans,” Aubry said. “So while these results are only suggestive at this point, they still point in the direction that supports prior research in terms of what boards can mean to planned performance.”

The research stopped short of recommending anything in regards to splitting off one retirement system from a larger group, so Webber said there’s still a lot of homework left to be done.

“We do seem to be relatively average on (pension board size) with 18 members,” Webber said. “I think one of the things we look at, or we could look at is, are states with smaller boards more effective or are states with larger boards more effective?”

Governor Matt Bevin had some concerns with the potential split. He said he believes a split would eventually lead to financial problems for the system during a forum at the Kentucky League of Cities in September.

CERS members have previously told committee members that they feel they can do a better job managing their assets than the Kentucky Retirement System board.

Russell said he hasn’t taken a stance either way.

“The underfunding is an issue and the financial situation, and that’s something that we’re going to be mindful of, something I’m mindful of, as we proceed forward on this,” Webber said. “What’s going to be best for those folks that have paid into the pension, those that are anticipating their pension retirement, and protecting that.”

Russell said he doesn’t want to put a deadline on the committee’s recommendation, but he said there’s going to be plenty of time when session starts next year to figure out a plan.