The Kentucky Public Pensions Authority (KPPA) told lawmakers this week that all the pension plans continue to improve in funding status, and four of the five insurance plans are fully funded.

“We’re not there yet,” KPPA Executive Director Ryan Barrow told Public Pension Oversight Board members.

The County Employee Retirement System (CERS) plan is seeing a return of 11%, outperforming the assumed rate of return of 6.5%. The Kentucky Retirement System (KRS) plans also outperformed their assumptions.

For Fiscal Year 2024, the CERS non-hazardous plan was funded at 58.4%, and the CERS Hazardous plan was funded at 54%. For year-over-year comparison, the CERS non-hazardous plan was 56.1% funded at the end of 2023, and the hazardous plan was 51.4% funded.

The Kentucky League of Cities (KLC) Board of Directors has taken a position to monitor the independence and viability of the CERS plans, which continue on an upward trajectory since separating from the KRS plans.

Senator Jimmy Higdon, R-Lebanon, noted that there is the possibility that the CERS board could adjust downward the CERS employer contributions and wondered why, if the plan is only 58% funded, they would not continue with higher employer contributions.

“Because of payroll growth they would actually get more in contributions by $13 million in non-hazardous and $4 million in hazardous,” KPPA Deputy Executive Director Rebecca Adkins said.

Higdon said he hoped the board would continue to pay the current contribution rate to fully fund the pension systems so that a cost-of-living allowance could make its way to retirees.

The CERS board voted last December to reduce employer contribution rates. The board will again consider reducing the employer rates next month. KLC will be reporting on upcoming contribution rates.

The image below shows what actuaries have recommended the board to set employer contribution rates by plan.