Pension board to discuss bankruptcy ruling
FRANKFORT, Ky. (AP) — The Kentucky Retirement System Board of Trustees will have a private meeting Wednesday to decide whether to appeal a recent bankruptcy ruling that could threaten the financial future of the system and its more than 300,000 participants.
A federal bankruptcy judge ruled last month that Seven Counties, a private community mental health center that has filed for bankruptcy, is free to leave the Kentucky Employees Retirement System. State officials fear the decision will allow the other 12 community mental health centers to also leave the system and require taxpayers to cover the cost.
"It's a major problem for the state," said state Rep. Brent Yonts, D-Greenville, co-chairman of the legislative committee that oversees the pension system.
The Kentucky Employees Retirement System is one of five plans administered by Kentucky Retirement Systems. It includes state government employees and non-teaching staff at state universities. It also includes employees of 13 community mental health centers - quasi-governmental entities that joined the system decades ago in what U.S. Bankruptcy Judge Joan Lloyd called "a legal wrinkle."
The Kentucky Employees Retirement System is the worst-funded public pension system in the country, according to Fitch Ratings. It has an unfunded liability of $17.1 billion. Its money comes from investments and employee and employer contributions - including taxpayers.
With retirement costs soaring, many of those private centers are trying to leave the system. If Seven Counties leaves the system without paying its share of the liability, it would force taxpayers to contribute an additional $1 billion over the next 20 years, according to Kentucky Retirement Systems Executive Director William Thielen. If all 13 community mental health centers leave the system, it would force taxpayers to pay an extra $2.4 billion over the next 20 years.
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Tenn. drops investigation into liquor giant Diageo
NASHVILLE, Tenn. (AP) — Alcohol regulators on Tuesday abruptly ended an investigation into whether global liquor giant Diageo PLC violated state laws by storing whiskey made in Tennessee in neighboring Kentucky.
The decision came after master distiller John Lunn testified that the liquor stored in Kentucky would be blended with other Diageo spirits, and that George Dickel Tennessee Whisky has been made and stored at the distillery all along.
Diageo and the state had been fighting in federal court over a law that requires whiskey made in Tennessee to be stored in or around the county where it is distilled. Diageo said the law violated interstate commerce rights under the U.S. Constitution.
About 16,000 barrels of bourbon and wheat whiskey produced at the Diageo subsidiary about 60 miles south of Nashville had been shipped to Kentucky over the past five years because of a warehouse shortage, Lunn said.
Assistant Attorney General Kyle Hixson said in federal court after Lunn's testimony that the state would not pursue penalties against Diageo, though he declined to say why.
Diageo attorney Bobby Burchfield said he will seek an agreement with the state to not seek penalties against Dickel if it has to send whiskey out of state again.
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Kentucky officials expect budget shortfall
FRANKFORT, Ky. (AP) — Kentucky's state budget director said Tuesday she expects the state to end the year with a deficit "significantly larger" than $28 million.
State economists predicted Kentucky would collect $9.6 billion in taxes for the 2014 fiscal year that ends June 30. As of May 31, the state has collected $8.5 billion in taxes, meaning the state would need to collect an extra $1 billion in June alone to prevent a shortfall.
The state collected $777 million in May - $16.5 million less than it collected in May last year - leading State Budget Director Jane Driskell to say a shortfall is "inevitable."
"It's been a tough time with the recession," Driskell said. "We have alerted our agencies and we are working with them to look at all possible options to address the shortfall."
Because the Kentucky constitution requires the state to end the year with a balanced budget, Democratic Gov. Steve Beshear will have to decide what to cut. It will be a familiar task for Beshear, who has had to cut $1.6 billion in state spending since he took office in 2007 because of declining state revenues.
"I don't think it's anything to be alarmed about," House Budget chairman Rep. Rick Rand, D-Bedford, said. "The governor is going to have some work to do. He has shown he is very capable of managing these situations."
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8 UPS employees claim racial discrimination
LOUISVILLE, Ky. (AP) — A group of eight current and former employees of United Parcel Service in Kentucky have sued the company saying they faced racial discrimination, poor treatment based on race and retaliation after they complained.
The men also contend an effigy of a black UPS employee hung from the ceiling outside the manager's office for four days.
The suit, filed Friday in Fayette County Circuit Court in Lexington, names three managers and the company as defendants.
The men say they were punished more severely than white employees for "alleged workplace infractions." Two of the employees were fired; two others resigned, which the lawsuit says constitutes "constructive discharge."
The men are seeking unspecified damages from Atlanta-based UPS, which has a freight service center in central Kentucky.
Luke Morgan, the attorney for the men, said his clients tried to work out the issues with UPS, but the company "has given them the runaround."
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