As Kentucky Public Pensions Authority Executive Director David Eager settles into his last year with the KPPA until his retirement the eight-member board voted on Thursday to begin the search for his replacement.
Members of the KPPA board voted to seat an internal search committee comprising KPPA board chair Keith Peercy, William O’Mara, Ellen Lynn Hampton, and Betty Pendergrass.
The search committee created a process to conduct a search for a replacement. In 2014 and 2015, the board previously utilized Deloitte to conduct a fruitless national search. Peercy advised board members away from a national search option, telling members there are quality candidates already working for KPPA and adding a national search would cost between $66,000 and $88,000.
Rather than selecting an internal candidate, the board opted to conduct a search on their own open to internal and external candidates.
Prewitt Lane offered a “word of warning” to the board, telling them opening the search could bring “political pressure.” Lane said he feared the job would appeal to “people who have certain connections.”
As outlined in House Bill 587, which was a KLC initiative, the KPPA also named Kristen Coffey as the KPPA’s “chief auditor.”
The KPPA board also briefly discussed their legislative update and the possibility of a one-time supplemental additional payment to retirees facing inflation. Earlier this week, President of Kentucky Government Retirees Jim Carroll, testified before the Public Pension Oversight Board in Frankfort advocating for such a proposal.
“Kentucky Government Retirees will ask the General Assembly for a one-time extra monthly pension check for all KPPA retirees, paid in July 2024. We believe a COLA should be guided by two basic principles. First, the benefit must be impactful. Second, it should be cost-effective,” Jim Carroll said in the meeting.
“As we know, the traditional means of granting a COLA was a small percentage increase in the pension benefit, typically 1.5 percent. We see two problems with that approach,” he continued. “First, it’s not impactful. An additional $20 or $30 a month is a weak response to a decade’s loss of real income. Second, it is not cost-effective. It would cost $352 million to underwrite an ongoing COLA for all KPPA retirees. It is a permanent benefit; therefore, it has to be amortized over decades. We believe a one-time benefit check would be impactful and it would cost less than $200 million.”
The KPPA did not vote on the idea in their quarterly meeting on Thursday, Eager said there is “not yet a solution,” on how to fund a one-time payment to retirees in the County Employee Retirement System (CERS).
The Kentucky League of Cities supported Senate Bill 2 in the 2013 legislative session, which among other things, suspended COLAs until the CERS retirement system reached 100 funding status. CERS (non-hazardous) ended fiscal year 2023 with 56.2 percent funded. CERS (hazardous) is 51.5 percent funded. KERS (non-hazardous) is currently 22 percent funded, facing a more than $12 billion unfunded liability. KERS (hazardous) is 65.8 percent funded.
