SENATORS BOWEN, HIGDON CALL FOR MORE TRANSPARENCY OF KRS AT PUBLIC PENSION OVERSIGHT BOARD MEETING

SEAL

Commonwealth of Kentucky
Senate Majority Office

For Immediate Release
Contact: John Cox
502-564-3120 Ext. 202

SENATORS BOWEN, HIGDON CALL FOR MORE TRANSPARENCY OF KRS AT PUBLIC PENSION OVERSIGHT BOARD MEETING

FRANKFORT, KY. (October 26, 2015) – At Monday’s Public Pension Oversight Board (PPOB) meeting in Frankfort, Chairman-Senator Joe Bowen (R-Owensboro) and Senate Majority Whip Jimmy Higdon (R-Lebanon) reacted to action by the Kentucky Retirement System (KRS) Board of Trustees to increase Executive Director Bill Thielen’s salary by more than 25 percent.

“I am very troubled that the KRS Board of Trustees, in the midst of rising shortfalls and stagnant raises for state employees, chose to raise Mr. Thielen’s salary by 25 percent to $215,000 a year,” Senator Bowen said.  What’s more disturbing is that a member of the KRS Board of Trustees went on to say that he is not concerned about criticism from the legislature because he ‘doesn’t work for the legislature.’”

“This may be true, but all of us do work for the people of the Commonwealth, and I don’t think it sits well with taxpayers when government leaders, who are ostensibly ‘public servants,’ are granted huge raises while the people that pay the large salaries struggle to make ends meet,” Bowen added. “And it goes without saying that large raises will result in larger pensions upon retirement.”

Bowen went on to cite concerns expressed earlier this year that KRS and the Kentucky Teachers’ Retirement System (KTRS) were paying hefty hourly rates to law firms, far in excess of the normal $125 per hour maximum, without any responsibility to have these contracts reviewed by the Government Contract Review Committee.

Senator Higdon said at the hearing that the large pay raise for Mr. Thielen was a “line in the sand” event for him, and announced his intention to introduce legislation to make non-elected members of the KRS Board of Trustees subject to Senate confirmation, and to investigate the possibility of legislation making KRS executive director raises above the annual CPI subject to Senate approval, as well.

“Now we have another instance in which KRS is awarding a large salary increase to an employee, and the contract itself is not subject to review by the General Assembly, unlike almost every other state government agency personal services contract,” Senator Bowen said. “Both KRS and KTRS are currently exempt from the Model Procurement Code, which establishes conflict of interest and anti-kickback rules, grants vendors the right to file protest with the Finance Cabinet over the awarding of a contract, and makes personal service contracts subject to Government Contract Review Committee.”

The Public Pension Oversight Board was created by the General Assembly in 2013 to bring more transparency to the operation of KRS.  In 2015, the PPOB’s authority was extended to include oversight of the Legislators’ Retirement Plan, the Judicial Retirement Plan, and KTRS.

“This trend toward greater transparency should continue,” Bowen said. “KRS and KTRS should not operate as islands to themselves, and I urge fellow PPOB members to adopt consensus legislation to remove these agencies’ exemption from the model procurement code so that their personal services contracts, such as this one with the executive director will be subject to further review by the General Assembly.”

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