Fulfilling a promise made to address Kentucky’s number one issue, Gov. Matt Bevin today announced the PFM Group was selected to provide consulting services for a comprehensive review of Kentucky’s state pension systems.
“Reforming the state’s ailing pension systems is one of this administration’s top priorities,” said Gov. Bevin. “The findings that will come from this pension fund audit will accurately identify our actual pension liabilities. It is our intention to shine the antiseptic light of transparency on the country’s worst funded pension system and financially secure the pension system for generations to come. Kentucky taxpayers, retirees and current employees deserve nothing less.”
The project scope will provide the most exhaustive review ever conducted of Kentucky’s pension systems. The analysis will include:
Overall solvency & liquidity analysis;
Assessments of outstanding obligations under various actuarial assumptions;
Critical review of past revenue and expenditures to identify reasons for the current financial status of the plans; and
Analysis of nationwide best practices and future actions that might be considered by the Commonwealth to put the plans on path toward long-term solvency.
A recent report from S&P Global Ratings found Kentucky has the lowest ratio of funds required to meet current and future pension obligations. Estimates suggest the state has $35 billion in unfunded pension liabilities.
Undertaking this comprehensive review is the most recent step Gov. Bevin has taken to reform Kentucky’s underfunded pension systems. In April, the Governor signed a historic budget dedicating an unprecedented amount of resources to the ailing pension programs. The budget established a $125 million permanent pension fund as a long term investment to meet future pension obligations.
In June the Governor abolished and reorganized the Kentucky Retirement System Board of Directors. This reorganization provided a more focused, expert vision and purpose, designed to carry out the objectives honoring the expectations of current and future retirees. In addition, it required an unprecedented level of transparency of the Kentucky Retirement Systems.
The PFM Group has broad consulting experience on pension issues. This engagement will include comprehensive pension plan advisory services for the Teacher’s Retirement System of the State of Kentucky (KTRS), the Kentucky Retirement Systems (KRS) and the Kentucky Judicial Form Retirement System.
The PFM Group’s previous clients have included the State of Tennessee and the Lexington-Fayette County Urban Government. The contract was awarded through a competitive bidding process and is effective September 15th.