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KRS OVERVIEW

KRS OVERVIEW. Kentucky Retirement Systems. David Eager, Executive Director. May 23, 2019. KRS Board of Trustees. KRS Board of Trustees: 17 Trustees 10 appointed by the Governor 7 directly appointed 3 from submitted lists 6 Elected by the members:

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KRS OVERVIEW

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  1. KRS OVERVIEW Kentucky Retirement Systems David Eager, Executive Director May 23, 2019

  2. KRS Board of Trustees KRS Board of Trustees: 17 Trustees • 10 appointed by the Governor • 7 directly appointed • 3 from submitted lists • 6 Elected by the members: • 3 CERS 2 KERS 1 SPRS • 1 Ex-Officio: Secretary of the Personnel Cabinet

  3. KRS Membership 06/30/18

  4. KRS Funded Status 06/30/2018

  5. KRS Contribution Rates FY 2019

  6. KRS Unfunded Contributors • KRS Boards and Actuary • Unrealistic assumptions caused the ARC to be way too low way too long • KRS Staff • Failed to get the message out

  7. KRS Unfunded Contributors • Governors • Budget requests were less than the ARC • Legislators • Cut the budgets • Didn’t prefund benefit increases • Took too long to pass reform legislation

  8. The KERS Non-Hazardous Funding Problem CONTRIBUTION RATES Recommended vs Actual FY2000 through FY2019 Unfunded Fully funded Recommended rates not met Recommended Actual + =

  9. KRS Unfunded Contributors • The Media • Didn’t cover the story • Equity Market Declines During The Great Recession (-37.6%) and The Dot Com Bubble (-37.6%) • Asset reduction/negative cash flow from FY 2002 to FY 2018

  10. KERS Non-Hazardous Pension Cash Flow with Investment Income and Expense ($000’s)Excluding Investment Gains/Losses Note: Inflows include Member, Employer and General Fund Contributions.

  11. KRS Unfunded Contributors • Funding Formula • % of pay funding with a declining workforce • Demographics • Too many retirees- too few employees

  12. Examples of Workforce Reductions

  13. KRS Membership 06/30/18

  14. KRS Solution • Funding Through 2043 • … Don’t tinker with the assumptions • Tier 3’s Longer-Term Impact • … Be patient • Fixed Allocation Funding • … A must!!!

  15. KRS Other Challenges and Issues • Quasi Agency Conundrum • Can’t afford to stay in KRS • Can’t afford to leave

  16. KRS Other Challenges and Issues • CERS Separation

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