OP-ED: Sen. Joe Bowen on Pension Transparency

COMMONWEALTH OF KENTUCKY
SENATOR JOE BOWEN

For Immediate Release
May 2, 2016
Contact: John Cox
502-564-3120
JOHN.COX@LRC.KY.GOV

The following is an op-ed submitted by Kentucky State Sen. Joe Bowen of Owensboro:

“Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”

– Justice Louis D. Brandeis (1856-1941)

These words were powerful in the early 20th Century when written by the former Justice of the Supreme Court and are arguably even more meaningful today.

As the primary sponsor of Senate Bill 2 (SB 2) during the 2016 Session, I sought to focus needed “sunlight” into the activities of the Commonwealth’s taxpayer funded state employee pension systems. Unfortunately politics got in the way and my efforts were fruitless. Key decision makers in the House of Representatives succumbed to the relentless opposition from the retirement system’s lobbyists and decided that transparency is not important.

The nearly $40 billion in liabilities of the retirement systems are a ticking time bomb threatening our entire state. Our retirement systems are ranked among the worst funded in the nation. Taxpayers deserve to know how the pension systems operate and legislators should to have the ability to set policy, not simply react to crisis after crisis. It is past time for change. SB 2 would have provided an opportunity for everyone interested in finding a solution to have the information they need to find those solutions.

Even my good faith attempts at compromise produced no results. The consequences of this inaction mean that you, the taxpayer, and state retirees (who are dependent on the systems for their checks) continue to be in the dark regarding how the systems make decisions. Decisions that involve investing billions of dollars.

Senate Bill 2’s key provision was requiring adherence to the state’s “Model Procurement Code” by the retirement systems. Meaning for the first time an open and competitive bidding when hiring investment managers. While establishing this process would have been victory enough, the bill also called for the reporting of management fees, transparency in investment performances, and Senate Confirmation of the Kentucky Retirement Systems’ Executive Director. Senate Bill 2 would have required more financial expertise of appointed board members and provided additional oversight from a watchdog group known as the Government Contract Review Committee.

The House’s failure to enact Senate Bill 2 does not mean the General Assembly took no action to solve Kentucky’s public pension crisis.  The Commonwealth will be making an unprecedented contribution of $1.28 billion above the recommended and required contributions to the pension systems.  A move I have been advocating for some time.  But this additional funding does not remove the need for more transparency.

“The most important political office is that of the private citizen.”

– Justice Brandeis

 

All is not lost. I have lived to fight another day and the retirement systems should remember that the 2017 Session of the General Assembly will be here before they know it.

 

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Note:  Senator Joe Bowen (R-Owensboro) represents the 8th District including Daviess, Hancock, and McLean counties.  He is chairman of the State and Local Government Committee and a member of the Transportation Committee, the Licensing and Occupations Committee, and co-chair of the Public Pension Oversight Board.  For a high-resolution .jpeg of Senator Bowen, please visit http://www.lrc.ky.gov/pubinfo/portraits/senate08.jpg.

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