Last updated: June 20. 2014 9:51AM - 421 Views

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For every action there is a reaction. Sometimes it just takes a long time for the reaction to happen.

A lot can happen in roughly 35 years.

Back in January 1979, Seven Counties Services joined the Kentucky Employees Retirement System. The nonprofit organization provides health and developmental services to those with mental, behavioral, developmental and intellectual disabilities, as well as those with addictions.

It is called Seven Counties because it treats more than 31,000 patients in the Louisville area in Jefferson, Bullitt, Henry, Oldham, Shelby, Spencer and Trimble counties.

On April 4, 2013, Seven Counties filed for Chapter 11 bankruptcy protection because of its huge debt owed to the retirement system.

KERS claims Seven Counties cannot declare bankruptcy because it is a governmental agency, but U.S. Bankruptcy Judge Joan Lloyd disagreed, ruling May 30 it could seek bankruptcy protection.

At a meeting Wednesday, the Kentucky Retirement Systems Board of Trustees unanimously voted to appeal the judge’s ruling, a decision we certainly support.

KERS is a $15.7 billion system comprised of pension programs covering state and municipal workers, but it is $17.7 billion short of future retirement and insurance obligations to those in the plans. Should the bankruptcy action of Seven Counties be allowed to stand, KERS, with $10.4 billion in unfunded liabilities, would be forced to absorb the $90.7 million in obligations to employees and retirees of Seven Counties.

Of the 126,000 members of the KERS non-hazardous pension fund, nearly 17,000 are Seven Counties’ employees or retirees.

In a statement, Seven Counties’ spokeswoman Gwen Cooper said, “It is unfortunate that the state continues to make this an adversarial process rather than exploring ways we can all work together to solve this complicated problem.”

We are having a problem seeing how it would not become adversarial if any agency owed KERS nearly $91 million and declared bankruptcy in order to free itself of that obligation.

Seven Counties is lucky KERS can’t say in return that it will discontinue benefits to its retired employees and keep whatever has been paid to date by current employees without any hope of those employees ever seeing a penny.

Judge Lloyd ruled Seven Counties is a private, nonprofit corporation and not a government agency. Noting the pension contributions paid by Seven Counties have multiplied by more than four in just seven years, she wrote, “Seven Counties can perform its charitable mission or pay system contributions that will force it to terminate operations. It cannot do both.”

Notwithstanding that Seven Counties provides services to at-risk and in-need individuals, we aren’t sure continuing to operate makes more sense than paying its obligation to KERS. …

Like Seven Counties, many other agencies and quasi-governmental entities are having a difficult time meeting their pension obligations. Like us, they too will be continuing to follow this story.

We support the decision by KERS to appeal the judge’s ruling and await the final adjudication in this important matter.

— The State Journal, Frankfort

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