Massive Double Whammy in Kentucky Pension Community

First, after 5 pm on Friday, May 30, Bankruptcy Judge Joan Lloyd issued an 80-plus page opinion that Seven Counties, the community mental health center that serves 32,000 clients in the Louisville metro area, is permitted to withdraw from the Kentucky state pension system.  Press and other speculation is running rampant on what this means for the rest of the “quasi-governmental” agencies who currently participate in the pension fund, and whether there will be a mass exodus from the already seriously underfunded system.  It seems almost a certainty that there will be an appeal.  The import is too significant to the pooled system and all of its participants.

In her ruling, Judge Lloyd stated that Seven Counties’ charitable function is being jeopardized by pension contributions, and that the organization provides services to “society’s most vulnerable citizens”.  As Judge Lloyd pointed out in a very practical fashion, Seven Counties could either perform its charitable mission by serving those in need or pay the KERS pension contributions and close down operations, but there is no way that it can do both.

( further detail- Article titled “Seven Counties can leave indebted Ky. Pension system” by Mike Wynn

Second, the City of Ft. Wright KY filed a class action complaint this week in Kenton Circuit Court against the Board of Trustees of the KRS for mismanagement, underfunding, commingling of CERS and KERS and other allegations.  This is a huge matter of state-wide importance, and must be closely watched as it progresses.  If the politicians are too scared to take on this large problem, these two matters will be forcing lots of hands in Frankfort.


Laura Day DelCotto is the founding member of DelCotto Law Group. Her practice of law focuses on helping business owners rehabilitate or sell their companies. Outside of Chapter 11 bankruptcies Laura Day also dedicates her time to educating Kentucky municipalities on ways to avoid Chapter 9 insolvency.


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