We’ve been questioning the demand from Kentucky Retirement Systems for Metro Government to throw nearly $11 million at it for the firefighters. Primarily because KRS is corrupt as all hell. And one of Greg Fischer’s top lackeys, Tommy Elliott, is still on the board. In fact, here’s what we said yesterday:
There’s no question that Louisville owes its firefighters and has for years. But throwing nearly $11 million at Kentucky Retirement Systems is not something that should be done lightly. Not while the FBI and SEC are investigating and not while Greg Fischer’s top guy, Tommy Elliott, is one of its secret hacks.
Fortunately, both Jim King and Jerry Miller are accountants and they’ll likely (hopefully?) stay on this issue with Metro Council.
Last August, we reported a $100 million currency loss at KRS and the agency has been trying to cover it up ever since. Doesn’t help that the SEC and FBI are both investigating the agency. So we’re highly suspicious of all activity involving anything over two or three dollars.
Because it’s entirely possible that the KRS is anticipating that $10-$11 million windfall from Metro Government in CERS (County Employee Retirement System)… and that’s why $5 million was shifted to shore up KERS by the distribution of currency losses.
Most everyone we speak with in Frankfort believes operating costs and other expenses are being unfairly put on the back of CERS. There’s no question that CERS is mostly made up of Jefferson County/Louisville beneficiaries. That puts the burden on Louisville. Unfairly.
In August of last year, a trustee questioned why overall performance lagged behind the performance of the disclosed money managers by more than $250 million during Fiscal Year 2011. KRS staff at first didn’t know (outrage). They later attributed $103 million in losses to a secret and illegal currency derivative manager. (That’s what they’ve been trying to cover up.) There were gains in prior years so the net losses were $54 million and spread quite unevenly. We believe that was done so illegally per IRS rules across the ten KRS plans.
CERS comprises roughly 47% of the benefits at KRS. Original accounting had CERS absorbing 54% – or $29 million – of the currency losses. KRS managers didn’t think that was enough so they yanked another $5 million from CERS, throwing $4 million to KERS (where all the KRS staff receive benefits, actually) and another million to the state police. That left CERS with 64% of the losses – or $34 million. How does that mess make any sense?
It’s not appropriate, according to investment professionals we know, for any public pension system to use currency derivative managers. That’s an opinion shared by the Kentucky Retirement Systems’ own investment consultant, R.V. Kuhns. We can’t find any legitimate reason for KRS to be paying a firm $7 million dollars (we wrote about it this morning) in fees. And we can’t justify why KRS staff tried to keep the manager a secret and attempted to hide information from board members and various reports for months and months.
Of course, KRS has a load of spin about why it shifted the losses:
CLICK FOR PDF
And that’s all it is. Spin.
This is why Louisville can’t have nice things.