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CERS moves ahead with XTP cost‑efficiency work; KRS trustees discuss scope and fee basis
Summary
Trustees were briefed on a cost‑efficiency RFP process in which CERS selected XTP for auditing fee and contract terms and possible renegotiation. Trustees asked whether contingent fees and recoveries should be calculated on CERS savings only or enterprise‑wide and raised concerns about who would pay XTP and how recoveries would be allocated.
Board members received an update on work to procure cost‑efficiency services and the status of contract negotiations with XTP, the firm selected by CERS to audit contracts, validate fees and, if warranted, renegotiate terms.
Staff recapped the RFP timeline: the RFP was issued in July 2025, closed in August, respondents were interviewed and CERS’ investment committee recommended XTP; on April 27 XTP delivered a draft service agreement and KPPA staff provided comments on May 5. Trustees said CERS has moved forward to negotiate a contract and staff noted CERS is the contracting entity at this stage.
Trustees asked several procedural and allocation questions. Staff described two payment streams that XTP proposes: contingent fees from recoveries (50% of recoveries for two years) and fees tied to negotiated savings; trustees asked whether those contingent fees would be calculated based on CERS’s share of savings or on enterprise‑wide savings across KRS assets. Staff and counsel said that, pending XTP responses and contract redlines, the current approach limits XTP’s work to CERS investments because CERS approved the engagement; any KRS participation would require a separate decision. Staff also noted that recoveries or negotiated savings would be allocated to systems in proportion to their ownership of the affected investments.
Several trustees questioned whether internal staff had already identified savings and whether an external consultant was necessary for some scopes. Staff said XTP’s work focuses on independent fee validation and implementation across multiple contract types and that final terms remain under negotiation; no KRS contract was executed at the time of the meeting.
