Auditor: Kentucky Pension Agencies Not Following Transparency Law
State Auditor Mike Harmon says Kentucky’s pension agencies aren’t properly disclosing how they invest their money and how much they pay investment managers.
Harmon says Kentucky Retirement Systems, Teacher Retirement Systems and Judicial Form Retirement System are out of compliance with Senate Bill 2, a 2017 law that requires great transparency in the state’s pension agencies.
“Our auditors found that when it comes to that basic requirement, KRS and TRS have fallen drastically short of what is required by the law,” Harmon said.
Harmon is a Republican and running for reelection this year against Democratic challenger Sheri Donohue.
The special examination found that KRS — which manages pensions for most state workers — had not posted 243 of the agency’s 281 investment contracts on its website.
Of the contracts posted, Harmon said that KRS allowed investment managers to determine what information is redacted. He said the agency had “abdicated its responsibility."
“It would be much like a baseball player going up to bat and being allowed to call his own balls and his own strikes,” Harmon said.
Auditors also reported that TRS had not disclosed 136 of its 167 contracts and said that the agency would redact information without requests from money managers.
The Senate Bill 2 pension transparency law unanimously passed out of the legislature in 2017.
Beau Barnes, deputy executive secretary and general counsel for TRS, said that the agency is “following the letter and spirit” of the transparency law.
“Releasing all contract information is contradictory to protections for sensitive details provided by current law. This hurts taxpayers by precluding partnerships as an investment, taking teachers out of funds that averaged a compounded 13.41% return the last 10 years,” Barnes wrote in a statement.
Harmon said it’s important for employees and taxpayers to make sure their money is being invested appropriately.
“You have employees that are depending on this, have planned their whole life around it, and it’s important that it will be there for them,” Harmon said.