Gov. Matt Bevin issued an executive order on Wednesday to remove Tommy Elliott from his position as chair of the Kentucky Retirement Systems’ board of trustees, but according to the Associated Press, Elliott continued to preside over their meeting on Thursday and KRS executive director Bill Thielen claims the governor does not have the legal authority to make such a move.
KRS manages the pension assets and insurance benefits for over 100,000 current and retired state and local government employees, and it includes the worst-funded public pension plan in the entire country. In total, the pension plans within KRS have an unfunded liability approaching $19 billion, largely due to Frankfort paying well below the recommended employer contributions for over a decade.
According to Bevin’s spokeswoman, Jessica Ditto, the executive order was issued because “KRS needs a fresh start and more transparency.” Ditto declined to respond to further questions from IL asking if there was a specific action taken by Elliott that warranted his removal, or if he would take further executive actions to remove more board members.
However, Ditto told the AP that Elliott was removed because KRS opposed a pension transparency bill in this year’s session of the Kentucky General Assembly that would have required competitive bidding for investment manager contracts and the full disclosure of their fees, which have long been criticized for their secrecy. The legislation passed the state Senate but was blocked in the House, as Thielen of KRS protested that the disclosure of investment manager fees would hurt their investment returns.
Bevin’s order cited state law and precedent giving him the authority to remove governor-appointed board members, with the exception of the boards of universities, the Council on Postsecondary Education and the state Board of Education. Bevin cited the same statute in his removal of the Kentucky Horse Park’s board chair, who was removed in March despite a non-binding opinion of Attorney General Andy Beshear stating the governor did not have such authority.
Thielen also told the AP that Bevin did not have such authority and there would likely be litigation to prevent his removal. At the KRS board meeting on Thursday, Elliott conducted business as usual, and the board voted to request the attorney general’s opinion on the matter.
Last year, Elliott was reappointed to the board by then-Gov. Steve Beshear, and his term was set to expire in 2019. Two governor-appointed trustees on the KRS board had their terms expire at the end of March, but both currently remain on the board.
Elliott — the senior vice president of Old National Bank and a longtime KRS trustee — is known as a prolific fundraiser for Democrats in Kentucky, and served as the chief fundraiser for Mayor Greg Fischer’s successful campaign in 2010. Former KRS trustee and whistleblower Chris Tobe has been a vocal critic of Elliott’s lack of transparency on the board, which he detailed in his book Kentucky Fried Pensions.
If this dispute between KRS and the Bevin administration spills into litigation, it will add to the already heated lawsuit and accusations between Attorney General Beshear and Bevin over the governor’s executive order to immediately cut higher education appropriations in the final quarter of the current fiscal year. At a hearing Thursday morning in Franklin Circuit Court, Judge Thomas Wingate said he will make a final ruling in the case within the next few weeks, with both sides agreeing to the Bevin administration setting aside $18 million of funds for universities until that decision.
Bevin also appointed an investigator on Friday to look into possible corruption in the administration of former Gov. Beshear, days after making unspecified accusations of criminal activity in a press conference. Former Gov. Beshear called the press conference a “pathetic spectacle.”