There’s a lot of drama surrounding Bluegrass Mental Health this week. Hoo boy. And if the agency goes down? It could push KERS much further into the ground, potentially forcing Kentucky Retirement Systems to take even more from CERS.
For the past 20ish years, Bluegrass and other mental health agencies have relied much more on federal funds than state. Most of the state funds are also federal pass-through dollars. So keep that in mind as new accounting rules go into effect over the next year requiring them to publish their unfunded pension liabilities.
If you check out page six of the audit (Warning: External PDF Link), you’ll see that Bluegrass paid about $55 million into KERS over the five-year period from 2008 to 2012. Since Bluegrass was permitted to only pay around 50% of the ARC, they’ve basically borrowed more than $50 million from KERS over the past five years.
Bluegrass and agencies like Seven Counties may have to show $50 million or more – which will certainly drive the feds crazy – and put all their federal funds in jeopardy. No one knows if that would force a shutdown, stiffing KERS.
But we know one thing is certain: greedy executive directors + greedy legislators + the culture of corruption at Kentucky Retirement Systems = pension disaster for the taxpayers.