Fort Wright, KY - In 2014, the City of Fort Wright filed a class-action lawsuit against the Board of Trustees of the Kentucky Retirement System, Case No. 14-CI-1259, in which the City sought restitution and an accounting for what the City alleged were improper investments by the Board of assets in the County Employees Retirement Systems (“CERS”). The lawsuit is currently at the Kentucky Supreme Court pending a motion for discretionary review.
In addition to the accounting and restitution claims, the City always hoped that the lawsuit would bring about changes in the structure of the Board. To that end, the City is pleased to report the passage of HB 484 , which was recently signed by Governor Andy Beshear. HB 484 creates an independent CERS Board of Trustees to manage investment decisions, actuarial data, auditing and asset allocations for the local pension system. Ultimately, the City believes that HB 484 will lead to greater accountability with respect to the investment of CERS assets.
The City of Fort Wright has long been fighting for stability of the CERS system, noting that it is a critical priority for all cities and taxpayers in the Commonwealth of Kentucky, and calling for local legislators to take action to help reduce the negative impact on the community that the substantial annual increases in the actuarial required contributions are having on services and tax rates around the Commonwealth.
The City of Fort Wright has seen significant increases in pension expenditures each fiscal year, and in FY 17/18 recognized actuarial pension expenses of $595,203 in addition to its $378,377 pension contribution. In FY 18/19 those amounts escalated to recognized actuarial pension expenses of $732,940 in addition to its $428,209 pension contribution which was a 13% increase. The recognized actuarial pension is a liability we are required to carry on our books by the state, the City has no other long-term liabilities.
Pension costs for FY 20/21 are anticipated to explode to an estimated $821,211.61 or 16.48% of our General Fund Budget, and under the current KRS Board of Trustees they were projected to increase a whopping 12% annually. By FY 24/25, pension costs are projected to skyrocket to $1,102,426.99, which equates to an unsustainable 22.12% of our General Fund Budget.
The purpose of separating CERS from KERS is to ensure the system remains free of political influence, regardless of future administrations, and we would like to express our sincere appreciation to the Kentucky Legislature, especially Senator Chris McDaniel and Representative Kim Banta, for taking the necessary actions to free CERS and hopefully return some stability to the CERS System.
The passage of HB 484 , while certainly a legislative victory in regards to our case, only resolves a portion of our claims surrounding the ongoing class action litigation, and the City of Fort Wright continues the pursuit of other non-resolved matters affiliated with the lawsuit.
For more information:
City of Fort Wright
Dave Hatter, Mayor