Kentucky Law Review

CJ: "Kentucky's pension debt to hit local governments' balance sheets"

Kentucky's pension debt to hit local governments' balance sheets

Despite roughly $27 million in net assets, a $7 million cash reserve and an AA- credit rating, the city of Hopkinsville, Ky., could be broke in less than two years — at least on paper.

That’s because new accounting rules that take effect July 1, 2014, require Kentucky and its 1,500 local governments, public agencies and other public employers that pay into the state retirement system, to reflect their portion of Kentucky’s massive pension debt on their financial documents.

That means that Hopkinsville, for example, will have to show an estimated $36 million pension debt, while cities such as Louisville and Lexington will be saddled with an accounting debt of $823 million and $191 million, respectively.

The newly reflected debt won’t alter those cities’ actual pension obligations. Public employers will pay for liabilities through annual pension contributions, as they do now.

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Of course, now take a look at those judicial appointments of legislators and the senior status program.  Who do you think is going to fund those folks getting large retirements?  Yup.  You and me.

"Whistleblower Disputes Kentucky Retirement Officials on Placement Agent Claim" from WKU Public Radio

I previously posted on CFA Chris Tobe's analysis of the use of RFP's to save the Kentucky Retirement System up to $85 million a year.  See, CFA Chris Tobe Comments on Kentucky's Retirement System and the Need for RFP's (requests for proposals).

Well, he was in the news in another matter involving finances and Kentucky Retirement Systems, and I am sharing that story with you.

When the taxpayers are worried about their jobs and families, then government employees and those in financial positions with the government are going to be under rigorous scrutiny by those who are ultimately paying the bills.

Whistleblower Disputes Kentucky Retirement Officials on Placement Agent Claim"

A whistleblower and former member of the Kentucky Retirement System’s board of trustees is disputing claims that the pension plan hasn’t used placement agents recently. Chris Tobe is an investment expert who served on the system’s board for four years. He’s also the main witness in a Securities and Exchange Commissions investigation into KRS and its previous uses of placement agents.

Officials at the pension agency told lawmakers yesterday that they hadn’t used a placement agent in three years. But Tobe says the agency uses a group called ORG for real estate deals and that ORG is registered as an agent in California.

“And I think that to me, that disqualifies them as an independent consultant for KRS and that KRS should be much more sensitive to these issues since they are still in the middle of an SEC placement agent investigation,” he says.

Tobe says ORG is registered as a placement agent for the California Teachers Retirement System and that ORG can't be an "independent consultant" in Kentucky and a registered agent somewhere else.

Tobe also says KRS and even the legislature is ignoring an important report regarding Kentucky’s use of placement agents in the past, which can be found here.

Agency officials did not respond to a request for comment.

CFA Chris Tobe Comments on Kentucky's Retirement System and the Need for RFP's (requests for proposals)

I was emailed the following post, link and comment from CFA Chris Tobe (i think CFA stands for Chartered Financial Analyst).  He also sent it to the LawReader, and I assume it was tendered to me for publication here.  Lawreader got it first, and I am sharing it with you now.

Government is looking for funds.  I was told by my father that the penny you save is more valuable than the penny you earn.  See,  Op-Ed: What is being done to recover some of the money leaks at the Metropolitan Sewer District? from January 20, 2012 of the Kentucky Law Review and CJ News: "Bud Schardein departs from MSD" and what about that sweetheart of a trust?.

And most will remember my posts years ago warning of the financial toll to be paid for funding the Senior Status Judges' Program and the Court House Building Bonanza. 

Well, to rephrase Sen. Everett Dirksen's remarks about spending - a few thousand here and a few hundred thousand or even a million dollars there, and before you know it you are talking  some serious money.  Per Mr. Tobe, that could be as high as $85 million per year!

No RFP’s for Kentucky Pensions- all back room deals.
by Chris Tobe, CFA

I estimate that over $65 million to as high as $85 million a year is paid out in fees in non-bid contracts by the pension systems in Kentucky.

While the 2012 placement agent bill was an extremely watered down version from that of 2011, it is currently unenforceable because there is no documentation from an RFP to check.

Because of total lack of oversight the $13 billion Kentucky Retirement System (KRS) have been able to bypass many of the competitive bidding practices typically used by other parts of state government. The Government Finance Officers Association http://www.gfoa.org/index.php?option=com_content&task=view&id=1666 officially recommends a RFP process for public pension managers to hire investment managers. While KRS does issue RFP’s for relatively minor expenditures like the investment consultant and headhunters, well over 95% of expenditures bypass the RFP process.

According to the Report of Independent Counsel to SEC: Placement Agent Abuses at Kentucky Retirement System http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2112594 “… contrary to prudent investment practices for public pensions, KRS does not utilize RFPs seeking competitive bids from prospective money managers. Failure to solicit bids undermines the integrity of public pension contracting. RFPs ensure that contracts for investment management services are competitively bid and that requirements related to such contracts are clearly and publicly stated.” KRS pays 66 Money Managers over $56 million a year in fees and not one has ever filled out an RFP. https://kyret.ky.gov/investments/cafr/2011-cafr.pdf pg.98-100.

Kentucky Judicial and Legislative Retirement System to my knowledge has never issued an RFP and uses just one Kentucky money manager and one Kentucky broker to manage that plan. While I am not as familiar, I believe the Kentucky Teachers Retirement Systems uses RFP’s very sparingly for Investment consultants etc.

Legislation should require all the Retirement systems to use RFP’s for all major purchases or services over $25,000 a year .

 

HL and CJ News: Judge tosses gerrymandered districts, filing deadline extended, while 22 legislators cut and run

These two stories go hand in hand.  One involves the court challenge to Kentucky's new redistricting aka gerrymeandering.  The other addresses the number of legislators not running for re-election, presumably a result of the gerrymandering for political purposes (sorry, gerrymandering is political).

For what it is worth, when you mess with anothers right to vote and dilute it by the numbers, postpone it for an election cycle, or move it to another area and lose your representative, it is and will be scrutinized.  Disenfranchising citizens is wrong, even when its a matter of degrees of disenfranchisement that falls short of the one-man/one-vote or Jim Crow laws.

Here they are:

Judge tosses new boundaries for state legislative districts
Kentucky.com

A judge has declared Kentucky's newly-drawn legislative districts unconstitutional and has ordered election officials to use previous district lines in this year's state legislative elections.

Franklin Circuit Judge Phillip Shepherd on Tuesday tossed out boundaries that lawmakers approved and Gov. Steve Beshear signed into law last month. The ruling was a victory for House Republicans and Democratic state Sen. Kathy Stein of Lexington, who challenged the constitutionality of House Bill 1.

Shepherd also extended the filing deadline for legislative candidates to 4 p.m. Friday, which gives legislative leaders time to decide whether to appeal to the Kentucky Supreme Court.

Read more here: http://www.kentucky.com/2012/02/07/2059443/judge-grants-injunction-against.html#storylink=cpy

Read more here: http://www.kentucky.com/#storylink=cpy

Kentucky legislators won't return next year
Louisville Courier-Journal
They are expected to increase their advantage after redistricting. Among the contested Senate races, one is Jefferson County's 37th District, which Clark now represents. But he can't seek re-election because he no longer lives in the district.

CJ News: "Bud Schardein departs from MSD" and what about that sweetheart of a trust?

Just a thought on the retirement of Bud Schardein.... If there is any question on the propriety or legality of his incentive bonus to stay on, then why not attempt to get it back?   If public office is a public trust, and funds are dispensed under the umbrella of a conflict of interest, then those imbued and in the heart of that conflict should not get to keep the money.

Should a trustee be entitled to award him/herself a large fee and keep it? 

Here is the Courier Journal story:

Bud Schardein departs from MSD

Bud Schardein has retired from Metropolitan Sewer District, MSD spokesman Steve Tedder said on Thursday. Schardein served as executive director from 2002 to Dec. 16, 2011, the day of the release of a highly critical state audit.

This is not my first foray into this area questioning the expenditure of public and quasi-public funds.  And there are more funds to look at to recoup. I am not saying there is necessarily a basis, but I do know the question should be asked and the matter the subject of an inquiry by those in the know and with the authority.

See,  Op-Ed: What is being done to recover some of the money leaks at the Metropolitan Sewer District? from January 20, 2012 of the Kentucky Law Review.

CJ News: "Judge delays filing deadline for Kentucky legislative candidates"

This judge is definitely a good shepherd.  And, yes that is his name, too.  Here's the story in the CJ:

"Judge delays filing deadline for Kentucky legislative candidates

In a move that could bring even more disarray to an already chaotic legislative session, a judge on Tuesday extended for one week the filing deadline for this year’s legislative elections while he decides whether the redistricting plans approved by the House and Senate are constitutional."

MSPRC News Update - Self-service Info Feature (calling 'em)

  MSPRC Self-Service Information Feature

The MSPRC is adding a Self-Service Information feature to its Customer Service Line.  This new feature gives callers the ability to get the most up-to-date Demand and Conditional Payment amounts as well as the dates those letters were issued without having to speak with a Customer Service Representative. Some additional benefits include:

• Extended Calling Hours – This new feature is available 24 hours a day, 7 days a week. Callers can now get case information outside of the MSPRC Hours of Operation.
• No Wait Time – With the Self-Service Information Feature, there is no wait time to get case information. Callers no longer have to experience the wait time associated with speaking to a Customer Service Representative.
• Unlimited number of cases inquiries on one phone call – Callers involved with multiple recovery cases can request information on additional cases with the same call.

Callers will need the following information to utilize the Self-Service Feature:

• Case identification number (found on all MSPRC correspondence)
• Beneficiary’s date of birth
• First five letters of the Beneficiary’s last name as it appears on their Medicare card
• Last 4 digits of Beneficiary’s Social Security number (or full Medicare number)

 The Self-Service Feature goes live on September 30, 2011.

 

Please continue to visit www.msprc.info as new tools & resources are available to assist you in the recovery process.

Dollar signs abound in Judy Green ethics battle with the taxpayers picking up most of the legal tab.... and all the bills are not in... yet.

Recent Courier Journal story shows how green the Judy Green hearings really were, and it looks like they will be getting greener yet with the taxpayer funding the legal fees following Judy Green's ethical shenanigans.

Here is a link and extract of the story:

Judy Green's legal bills mount to $77,000 and counting

The legal bill for Louisville Metro Councilwoman Judy Green's ethics hearings this summer will cost taxpayers more than $77,000 — with more attorney costs to come for Green's expulsion hearing last week.

And the biggest chunk — more than $53,000 — is for Green’s defense.

In all, three attorneys and a retired judge were on the public payroll for the various Green proceedings, which included two Ethics Commission hearings and the removal hearing by Green’s Metro Council colleagues.

The provision to pay for private lawyers to consider cases involving ethics complaints involving public officials was written into the city’s new ethics ordinance, which was passed by the Metro Council last year. The Jefferson County Attorney’s Office couldn’t defend Green because it represents the council as a whole, not individual members.

Jefferson County Attorney Mike O’Connell, for example, eventually served as a legal adviser to the council during Green’s removal hearing.

Republican Kelly Downard, who was chairman of the Council Court, which was made up of the 20 council members who served as the jury in Green’s removal hearing, said having the provision in the ordinance for a taxpayer-funded lawyer is “a protection that is critical.” * * *

Green’s defense during the Ethics Commission hearings cost $53,153.90. That total is for work by the Reed Wicker firm, which was appointed in January by the Jefferson County Attorney’s Office. * * *

James Earhart, who served as the investigating officer during Green’s ethics hearings, which meant he was the prosecutor in both hearings, was paid $125 per hour for 108.9 hours.Earhart’s bill of $13,950 included a $350 reimbursement for out-of-pocket expenses associated with the hearings. * * *

Retired Jefferson Circuit Judge Tom McDonald submitted a bill for $9,781.25. He served as hearing officer for the Ethics Commission, which means he played the role of judge in those proceedings. * * *

One more large legal bill has yet to be submitted — from Gregg Hovious, who was hired by King in May to advise the Metro Council on whether it should initiate the removal process against Green. Hovious was then hired to prosecute Green during the expulsion hearing. * * *

The only attorney to work on the case and not be paid with public funds is Derwin Webb, who was hired to defend Green during the expulsion hearing. The ethics ordinance does not call for a publicly funded defense during those proceedings.

Cops, cameras, and "you shoulda been in pictures" - Kentucky looks like only state that denies access to recordings made by police-cruiser cameras

from the open government blog.

As you might guess the police cruiser cams may be useful in other areas of practice too.  I had a case involving an accident by a university security vehicle running a red light.  Although, the video was obtained during the course of discovery, slowed down to show the impact and lights, and used at mediation, what if I had requested and/or needed it pre-suit???

Kudos to Al Cross, but I am "borrowing" his post en toto for readers to have access.

Kentucky looks like only state that denies access to recordings made by police-cruiser cameras

Kentucky appears to be the only state that denies public access to recordings made by cameras in police cruisers. Scott Wartman of The Kentucky Enquirer discovered that this week as he followed up on the guilty plea by Covington City Commissioner Steve Frank for driving under the influence.

"Open-records laws across the country compiled by the Reporters Committee for Freedom of the Press show that only in Kentucky is the public not allowed to view video of DUI traffic stops," Wartman writes. "First Amendment experts say they don't know of any other state with an exemption for DUI videos," and some think the law "raises constitutional issues and violates the public's right to know." Making cruiser recordings available "serves as an important check on police abuse," David Hudson, a scholar at the First Amendment Center at Vanderbilt University in Nashville, told Wartman.

The law was passed in 1984 with major changes to Kentucky's DUI law. The sponsor of the bill, then Sen. Henry Lackey, told Wartman that he didn't know why. "I don't remember anyone bringing that issue up," said Lackey, now deputy state aviation commissioner. Jon Fleischaker, attorney for the Kentucky Press Association, told Wartman, "Although I don't know for certain, my guess is it was done out of some misguided sense of privacy and some concern for how the thing could be used." He said the law could be challenged on constitutional grounds if a recording is used in a case. "Let's say I'm a defendant who is wrongfully accused and I want to show the public the tape," he said. "Why shouldn't I be able to do that?"

 

Some recent stories on health care, children and insurance to cause pause to think

Two recent stories make me wonder about the new proposed health insurance changes coming down from the federal government and some of the unintended consequences. 

The first story shows that the children would have paid the price if the insurers had their way but for government regulatory intervention AT THE STATE LEVEL!

• Kentucky orders insurers to sell child-only health policies (58) (11/18/10)

The next two stories from the New York Times reminds us that the system may not be ready to handle the additional insureds and that the responses by some in the other story shows mergers may be seen as a solution.  However, I never thought that adding all those insureds could overload the system, and if so, what have those in need of medical treatment been doing??  This should be a wake up call that we need to not only address the needs of providing some methods for the uninsured to be treated but when they get to the medical provider there is a provider to see them!!

Consumer Risks Feared as Health Law Spurs Mergers

Nurses’ Role in the Future of Health Care