RESOLUTION NO. __________, SERIES 20134
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A RESOLUTION PERTAINING TO SEPARATION OF THE COUNTY EMPLOYEE RETIREMENT SYSTEM (CERS) FROM THE KENTUCKY RETIREMENT SYSTEM (KRS) AND CREATION OF AN INDEPENDENT BOARD TO ADMINISTER IT (As Amended).
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Sponsored By: Council Members Miller, Downard, Fleming
WHEREAS, CERS provides retiree pension and health benefits to Louisville Metro Government (LMG), its employees and retirees; and
WHEREAS, 17% of the participants in CERS are or have been employees of organizations based in Louisville Metro, including LMG, Metropolitan Sewer District (MSD), Transit Authority of River City (TARC), Louisville Water Company, non-teacher employees of the Jefferson County Board of Education, as well as many smaller entities; and
WHEREAS, these Louisville Metro-based organizations pay over $127 million annually, of which LMG contributes over $73 Million a year, into the CERS Pension Plan; and
WHEREAS, CERS is a constituent part of the KRS and managed by the KRS Board of Trustees, which also manages the Kentucky Employee Retirement System (KERS); and
WHEREAS, Moody's recent analysis of State credit-worthiness found that Kentucky has the third highest adjusted pension liability relative to revenues with a ratio of 140.9%; and
WHEREAS, the investment assets of CERS are comingled with all other constituent systems of KRS, including the KERS which is funded at about 27% versus over 61% for CERS; and
WHEREAS, KRS allocates its administrative costs on the basis of Assets rather than Participants, Liability or Payroll, CERS is charged with approximately 67% of Administrative Costs while having only 49% of the Pension Liability; and
WHEREAS, due to the low funding levels and negative cash flows of KERS, KRS investment practices are detrimental to the returns CERS could earn if operated as a stand-along entity that did not simultaneously have to retain large cash positions to meet benefit payments and then enter into h...
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