House Speaker Greg Stumbo has called for an impromptu meeting of the state House of Representatives Tuesday to discuss the state’s troubled pensions systems.
The summoning came days after lawmakers received more bad news about the state-managed retirement funds — a 1.3 percent loss on returns into the Kentucky Teachers Retirement System and a 0.5 percent loss on investments in the Kentucky Retirement Systems.
In an emailed statement, Stumbo said Friday he called the meeting because of the poor returns and because the pension agencies are paying what he called “exorbitant placement fees” for investment managers.
“Several members have asked about this issue, and many have gotten questions from their constituents, so I thought this would be the best way to answer their questions and therefore invited the full chamber,” Stumbo wrote.
Kentucky Retirement Systems, which manages pensions for about 120,000 current and future retired state employees, spent about $123 million on investment fees in the 2016 fiscal year.
Kentucky Teachers Retirement Systems, which manages pensions for about 140,000 current or retired teachers, spent about $46 million on investment fees in the 2015 fiscal year.
Stumbo, a Democrat, has also called for a moratorium on placement fees until an audit of the retirement systems is completed. The state pension systems are short about $35 billion of the money they need to make future payouts to current and future retirees.
Republicans criticized the timing of the meeting, which is the same day as a Democratic fundraiser in Frankfort. House Minority Leader Jeff Hoover said GOP members would boycott the Tuesday meeting, arguing that taxpayers would effectively be paying for legislators to travel to a political event.
Hoover, the Republican leader of the House, said Stumbo’s interest in pension losses was “newfound” and criticized his stances on pension issues in the past.
“Now, as Kentucky is on the verge of ousting him and his Democrat cronies running the failed retirement system, he wants to pretend he cares?” Hoover said in an emailed statement. “Every single House Democrat either voted ‘No’ or did not vote on the issue of pension transparency.”
The Republican-led state Senate approved a bill during this year’s legislative session that would have subjected the retirement systems to the state procurement code, which requires contracts to be competitively bid out. The bill never passed the House.
The legislature’s approach to pensions is a political issue ahead of the November elections, where Republicans are attempting to take control of the House for the first time since 1921.
At a meeting of the Public Pension Oversight Board last week, Sen. Joe Bowen, a Republican from Owensboro, questioned the strategy of the state’s pension managers.
“Maybe the laws of investing don’t apply in today’s market, maybe we’ve got to have a total different model, outlook or strategy going forward because honestly, what we’ve heard is a lot of defending of where we’ve been in years past, defending of past strategies,” Bowen said. “When do you change, when do you say ‘you know what this isn’t working, we’ve got to do something different?”
The meeting will be held at 11 a.m on Tuesday in the House chamber.
This story has been updated.