Kentucky Governor Steve Beshear says he is pleased with a decision by the Kentucky Retirement Systems to appeal a recent ruling that would allow quasi-governmental agencies to withdraw from the beleaguered public pension system.
Earlier this month, a federal judge ruled that quasi-governmental agencies like the mental health provider Seven Counties Services aren’t government agencies at all, and can exit the Kentucky Retirement System to escape their pension debt.
Beshear says the ruling is “very dangerous,” and he supports an appeal of the decision.
“What it does is open up a lot more unfunded liability for the rest of the people on the system, because in effect, you will be able as a quasi-governmental entity to leave the system but not really be responsible for your part of the unfunded liability that you have helped to create,” Beshear said. “That’s just unfair to the whole system.”
Beshear says that if the decision is upheld, it would create millions of dollars in new unfunded pension liabilities.
“It is a very dangerous ruling, in terms of the financial stability of our pension system,” Beshear said “And so I want to make sure that that gets a full hearing and hopefully will get overturned on appeal.”
The KRS has come under fire in recent years for risky investments and underperformance, and has a current unfunded liability of about $17 billion dollars.