Kentucky Treasurer Seeks To Block KRS From Paying Ousted Chair’s Legal Fees

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Tommy Elliott, former chairman of the Board of Trustees, and Executive Director Bill Thielen listen to a presentation during the meeting of Kentucky Retirement Systems on May 15, 2014.

Alix Mattingly/KyCIR

Tommy Elliott, former chairman of the Board of Trustees, and Executive Director Bill Thielen listen to a presentation during the meeting of Kentucky Retirement Systems on May 15, 2014.

Kentucky Treasurer Allison Ball filed legal papers today to overturn the state pension system’s payment of $50,000 to cover the cost of its ousted chairman’s lawsuit against Gov. Matt Bevin.

Bevin removed the former chairman, Louisville banker Tommy Elliott, from the Kentucky Retirement Systems Board of Trustees in April — three years before his term expired. Elliott and another trustee sued the governor and KRS in Franklin County Circuit Court in June, seeking to restore Elliott to the board.

KRS paid their legal bill of $50,000, saying state law calls for the agency to pay for legal costs “arising from the performance” of trustee duties.

Ball, a Republican first-termer like Bevin, disagrees. In a written statement, she said the law applies to current members of the KRS board.

“Mr. Elliott is not a current member,” she said. “Whether the termination of Mr. Elliott was rightful or wrongful, he has, in fact, been terminated and therefore cannot use $50,000 of hard-earned money of Kentucky retired workers to pay for his legal challenge.”

Bevin’s office had criticized the payment when it was first reported by the Kentucky Center for Investigative Reporting last week. Since replacing Elliott and reconstituting the KRS board, the governor has found himself in a maelstrom of legal challenges. The strongest of those came from Attorney General Andy Beshear, who is attempting to join Elliott’s lawsuit and challenge the legality of the moves.

KRS Executive Director Bill Thielen said Monday that he hadn’t seen the motion and could not respond to it. He defended the agency’s payment of the bill to Middleton Reutlinger, the Louisville law firm representing Elliott.

“From a legal perspective, we believe that we are required to reimburse the litigants in this case because the issues arise out of the performance of their duties,” Thielen said.

Thielen said Elliott was traveling in Europe and wasn’t available for comment.

Ball’s motion to intervene is the first attempt in court to require Elliott and KRS Trustee Mary Helen Peter to pay their own legal bills. KRS paid the bills in two separate payments in June, using money collected from state and county employees and retirees.

“As state treasurer, my job is to be the watchdog of the people’s money, including our retirees’ pensions,” Ball said. “I am confident that the judge will rule in favor of the people.”

KRS is one of the nation’s most underfunded public pension systems, with a shortfall of about $35 billion.

Reporter James McNair can be reached at jmcnair@kycir.org and (502) 814.6543.

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