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KPPA board votes 5–2 to oppose CERS’ proposed reorganization of Chief Auditor role
Summary
The Kentucky Public Pensions Authority voted 5–2 on Sept. 25 to publicly oppose a CERS proposal to reorganize the Office of the Chief Auditor, after debate about audit independence, employer reporting gaps and whether structural change is premature.
At its Sept. 25 meeting, the Kentucky Public Pensions Authority voted 5–2 to publicly oppose a County Employees Retirement System proposal to reorganize KPPA’s Office of the Chief Auditor.
The motion, moved by Lynn Hampton and seconded by William Summers V, stated that "the KPPA Board would publicly oppose the reorganization proposed by the CERS Board" and passed with five votes in favor (Keith Peercy, Lynn Hampton, Prewitt Lane, William O’Mara, William Summers V) and two opposed (Dr. Patricia Carver, George Cheatham).
Board members who opposed the reorganization said they were concerned about unilateral action by one board and urged fuller consideration of alternatives. Keith Peercy argued the three-board governance model for KPPA, KRS and CERS depends on cooperation and cautioned that a structural change proposed by only one board would be premature. He said the existing internal plan developed by KPPA staff should be given a chance to work before pursuing legislative changes.
George Cheatham and Ed Owens III (CERS CEO) argued the change was needed to secure greater audit independence and to address what they described as longstanding employer reporting and audit-follow up issues. Owens cited referrals from the Auditor of Public Accounts and argued the current audit system had not delivered timely follow-up for flagged employers; Cheatham cited past underreporting concerns and pointed to employer audit backlogs and flagged employers requiring follow-up.
Supporters of the motion said the proposed reorganization could be disruptive and risk embedding the auditor within executive leadership in a way that could undermine objectivity. William O’Mara noted that KPPA’s internal auditor already compiles annual risk assessments and questioned whether an embedded Chief Auditor would be sufficiently independent while part of executive management.
The board’s formal opposition does not prevent CERS from pursuing legislative changes. Board members who supported collaboration said they would continue to work with CERS and KRS to explore improved audit approaches, including enhanced sampling, certification or technology-assisted processes.
The Board did not move to a closed session on this item; the meeting proceeded to its next agenda items and adjourned later in the session.
