Kentucky Governor Signs Measure to Revamp Local Pension Boards

Kentucky Gov. Andy Beshear recently signed legislation creating a separate nine-member board of trustees for the County Employees Retirement System (CERS).

The measure establishes the Kentucky Public Pensions Authority, which would oversee the new board of trustees for CERS. The new pensions authority would also oversee a nine-member board of trustees to manage the Kentucky Employees Retirement System (KERS) and the State Police Retirement System (SPRS).

Another bill Beshear signed temporarily freezes employer contribution rates and resets the amortization period for KERS, CERS, and SPRS to a new 30-year span.

The pensions authority will hire an actuary for both boards and provide day-to-day services such as benefit counseling, legal services, and benefit payments. An executive director will be the chief administrative officer for the pension authority, CERS and the Kentucky Retirement System (KRS). Four members of the CERS board and four from the KRS board will review personnel and administrative expenses for the Kentucky Public Pensions Authority.

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A provision in the bill also prohibits the governor from reorganizing, replacing, amending, or abolishing the KRS board of trustees. While that provision takes effect immediately, a CERS board of trustees is not required to be in place until April 2021.

According to the Kentucky League of Cities, which was a strong proponent of the board change, CERS accounts for 76% of the pension assets managed by the KRS and 64% of the membership, but has only 35% representation on the KRS board of trustees and has no representative on the KRS investment committee.

Under the new law, both the CERS board and KRS board will have decision-making authority. The CERS board will be comprised of three representatives elected by members, two of whom will represent non-hazardous members, with one representing hazardous duty members.

The remaining six members will be appointed from lists provided to the governor by the Kentucky League of Cities, the Kentucky Association of Counties, and the Kentucky School Boards Association. The appointed members will be required to be experts in their field, with at least 10 years of experience in either investments or retirement management.

The KRS board will also have three representatives elected by members—two from KERS and one from SPRS—and six gubernatorial appointees from the current KRS board. The bill requires Kentucky Senate confirmation for all appointees.

In March, KRS Executive Director David Eager told CIO that board overhaul “increases the complexity of managing the five main retirement and health care plans.” He said that, under the law, KRS will be required to serve three boards, not one, which he said could mean preparing for more than 70 board and committee meetings compared with just 30 today.

“Our costs will no doubt increase, which will ultimately have to be borne by taxpayers,” he said.

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Tags: Andy Beshear, CERS, County Employees’ Retirement System, Kentucky, Kentucky League of Cities, Kentucky Retirement Systems, Kentucky Teachers Retirement System (KTRS), KERS, KRS, SPRS, State Police Retirement System

Dividend net changes for domestic US common stocks declined $5.5 billion during the first quarter, marking the first quarterly decline since the second quarter of 2009, and the worst since the first quarter of 2009, according to S&P Dow Jones Indices.

“Dividends had a good run, culminating with a record payment in Q1 2020, as shareholders reaped the benefits of a 10-year bull market,” Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices, said in a statement. “March, however, gave a glimpse of what Q2 may be like as dividend cuts and suspensions started to be announced. For 2020, liquidity and cost control are now the top priority, with dividends lowered and buybacks an endangered species.”

During the quarter, aggregate dividend increases totaled $12.4 billion, a nearly 25% drop from $16.5 billion at the same time last year, while aggregate dividend cuts increased 278% to just under $18 billion from $4.75 billion during the year-ago quarter.

Net dividends rose $28.2 billion for the 12-month period ending in March, compared with a $51.3 billion increase during the same period last year, as increases were $52.5 billion compared with $63.1 billion a year ago, while decreases were $24.4 billion compared with $11.8 billion for the previous year.

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“The full impact of these cuts will soon be felt as fewer and smaller dividend checks are sent out,” Silverblatt said. “At this point, the depth of the cuts is dependent on the COVID-19 economic impact. Until we understand its full extent, companies may be forced to take prudent measures.”

First quarter dividend payments for the S&P 500 increased 9.6% on a per share basis to a record $15.32, up from the previous record of $15.21 set during the fourth quarter of last year, and up from $13.98 during the first quarter of last year. On an aggregate basis, index components paid $127 billion in dividends during the quarter, up from $117.3 billion during the year-ago quarter. For the 12-month period ending in March, the index paid a record $59.58 per share, up from $54.94 during the same period in 2019, with an aggregate $495.1 billion paid to shareholders, compared with $464.5 billion during the year-ago quarter.

S&P Dow Jones Indices also said 728 dividend increases were reported during the first quarter, down 6.3% from the 777 dividend increases during the first quarter of 2019. And for the 12-month period, 2,332 issues increased their payments, which is down 10.2% from 2,597 issues a year ago.

Meanwhile, 134 issues decreased dividends during the first quarter of 2020, a 24.1% surge from the 108 issues decreased during the first quarter of last year. Dividend decreases jumped to $17.96 billion for the quarter from $4.75 billion at the same time last year. And for the 12-month period, 364 issues decreased their dividend payments, compared with 344 decreases during the year-ago period.

“At the start of the year, projections were for a double-digit dividend payment gain—now the concern is for a double-digit decline,” Silverblatt said. “The bottom line is that it was a good run, and eventually we’ll get back to it; we just have to hang on until then.”