FRANKFORT, Ky. (WDRB) -- Kentucky State Auditor Mike Harmon said two of its largest public pension systems are breaking a 2017 transparency law by not properly disclosing information about how they invest money and pay investment managers.
According to Harmon, auditors found that the Kentucky Retirement Systems (KRS) failed to post 243 of its 281 investment contracts on its website.
“It is clear to me that they are not complying with Senate Bill 2,” Harmon told reporters at a news conference Tuesday in Frankfort.
He said the Teachers Retirement System (TRS) had not posted 136 of its 167 investment contracts on its website. Harmon said KRS also allowed managers to do their own redactions on contracts that are posted.
“Each of these funds is worth billions of dollars. Each of these funds has multiple obligations,” Harmon said. “It is not only important but imperative that we assure the health of these systems so that people that have worked so hard can get these retirement pensions.”
Jim Carroll, president of the group Kentucky Government Retirees, said the report raises concerns.
“It's taxpayers' money that's being invested in these various investment vehicles," Carroll said. "And so there needs to be accountability in how that money is spent."
In statements, both pension systems questioned the report's accuracy.
“Unfortunately, the examination is highly flawed and contains several factual errors which led the Auditor’s Office to misinterpret the true status of the Systems’ efforts to comply with the provisions of Senate Bill 2,” KRS Executive Dir. David Eager said.
TRS General Counsel Beau Barnes said his organization is “following the letter and spirit of the law, including Senate Bill 2…”
The systems also said sharing some private business information could have a detrimental effect on their ability to invest.
“Releasing all contract information is contradictory to protections for sensitive details provided by current law,” Barnes said. “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.”
Gov. Matt Bevin, himself a former investment manager, disagreed.
“Every single thing people want to know about the pension system should be made available to them," he said. "And so I hope this report will help to encourage the fact that will actually happen."
The pension systems have 60 days to file an official response. What happens next is unclear since Harmon said the law does not include any means of enforcement.
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