A lack of transparency and judicial good sense provide this edition of “Liberty Boosters and Busters.”
Liberty Booster: Kentucky Auditor Mike Harmon, who released an audit confirming a culture of secrecy continues to exist within the commonwealth’s two largest public-retirement systems more than two years after the General Assembly unanimously passed legislation requiring the major pension plans disclose information regarding investments, particularly fees paid to investment-fund managers.
Harmon’s audit also reveals that a startling number of investment contracts aren’t even posted.
Both the Teachers’ Retirement System (TRS) and Kentucky Retirement Systems (KRS) failed to post more than 80% of investment contracts on their websites – a blatant slap in the face of the 2017 law and the legislature that passed it.
Perhaps even more startling is Harmon’s discovery that the KRS allows outside investment managers to determine what information is redacted in the contracts which do get posted.
His office rightly concluded the agency had “abdicated its responsibility,” and compared it to a baseball player “going up to bat and being allowed to call his own balls and his own strikes.”
Beneficiaries relying on these state retirement plans should be aware of the lengths to which the systems go to avoid sharing information about how their monies are invested and the shenanigans involving high payments to private equity and hedge fund for sometimes downright poor returns.
While investment returns aren’t the greatest contributor to our state’s pension problems, it’s troubling the lengths to which the systems’ administrators will go in making investment and fee information unavailable to those paying the freight.
Both KRS executive director David Eager and Beau Barnes, longtime deputy executive secretary and general counsel for TRS, whined about Harmon’s audit, claiming – as do most bureaucrats whose default position is less, not more, transparency – that shining the light on the systems’ investment practices as required by the General Assembly could harm their ability to reap successful investments.
I’m not buying that with millions to invest, the commonwealth cannot attract the kind of managers needed to maintain both a robust and righteous investment program with reasonable fees – even in a transparent environment.
Liberty Buster: Franklin Circuit Judge Phillip Shepherd, who “liked” a Facebook post supporting Democratic Attorney General Andy Beshear’s gubernatorial campaign challenging incumbent Republican Gov. Matt Bevin even while adjudicating a politically-charged case involving the Kentucky Labor Cabinet’s “sick out” investigation.
Shepherd showed poor judgement at best and surprising bias at worst by even giving the appearance of siding with Beshear, who, along with the Jefferson County Teachers Association, sued the Bevin administration’s labor cabinet.
Chief Jefferson Circuit Court Judge McKay Chauvin wrote a few years ago that judges are “obliged to avoid saying or doing anything off the bench that might cause someone to doubt the impartiality of what we are saying or doing on the bench.”
Some will excuse Shepherd’s conduct by pointing to Bevin’s past derogatory comments labeling the judge as “a political hack.”
That doesn’t work here.
Truly professional umpires continue demonstrating sound judgment and seek to make the right calls no matter what vulgar comment some loud-mouth manager might send their way.
Shepherd, likewise, is paid by taxpayers to act professionally, no matter how politically charged the environment inside or outside his courtroom becomes.
For the judge to show support in any way, shape or form for Beshear’s campaign – especially when the attorney general himself was involved in filing the lawsuit over the cabinet’s “sick out” probe – is akin to an umpire making it clear he’s a fan of one of the teams involved in a game he’ll be calling tomorrow.
How much confidence would you have that he’ll call a fair game?
Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Reach him at firstname.lastname@example.org and @bipps on Twitter.
Editor’s note: The Bluegrass Beacon is a weekly syndicated newspaper column posted on the Bluegrass Institute’s website after being released to and published by newspapers statewide.