Retiree fund trustees worry mergers afoot

Gov. Asa Hutchinson’s aim to reduce the number of state agencies has at least a few trustees of the largest retirement system wondering if this latest overhaul effort portends another attempt to merge different retirement systems.

Almost two decades ago, legislation to merge state government’s retirement systems fizzled in the Legislature.

On March 15, the Republican governor announced his intention to propose in the 2019 regular legislative session cutting the number of state agencies that report to him from 42 to fewer than 20. He declined to rule out options such as merging state retirement systems.

While the directors of the retirement systems are part of state government, they don’t report directly to the governor; they report to boards of trustees. However, the governor appoints some of the trustees on most of the retirement boards.

On the same day as Hutchinson’s announcement, Arkansas Teacher Retirement System Trustee Danny Knight asked system Executive Director George Hopkins in an email whether “this is a move to combine the retirements?”

In response, Hopkins wrote in an email, “I don’t think so.”

Their emails were obtained this week by the Arkansas Democrat-Gazette through a public-records request.

During the board’s meeting this week, Trustee Richard Abernathy posed a similar question to Hopkins.

“I have not been contacted by the governor’s office whether there might be any potential for ATRS to consolidate with any other agency,” Hopkins told the board. Arkansas Public Employees Retirement System Trustees Steve Faris and Larry Walther were in the audience.

“I would say that the chances of that, once they looked at what we really do and how specialized it is, that it would be unlikely that there would be any cost savings by … creating what I’ll call a retirement head that would be supervising all the retirement [system] executive directors in the state, because each of the systems are so unique in terms of their benefits and how they operate,” Hopkins said.

The Arkansas Teacher Retirement System — state government’s largest — has more than $17 billion in assets and more than 100,000 working and retired members.

The second-largest system is the Arkansas Public Employees Retirement System, which has nearly $9 billion in assets and more than 75,000 working and retired members. The system manages the investments for the Arkansas State Police Retirement System.

Completing the list are the Arkansas State Highway Employees Retirement System, Arkansas State Judicial Retirement System and Arkansas Local Police and Fire Retirement System. These systems collectively have more than $3 billion in assets.

Hopkins told the teacher retirement system’s trustees that the system operates with about 75 employees and that’s about 25 percent fewer than it had when he started as executive director in December 2008. The system has become more efficient with the help of technology, he said.

“As we get into some of the esoteric things on our later part of this agenda … you will see that having somebody trying to oversee like five retirement systems, if they had hair when they started, they’re not going to have hair long, male or female. It just runs you ragged with all the different issues that pop up,” he said.

Hopkins said system officials will work cooperatively with the governor’s office and “anyone else to see if there is some kind of thing we can do differently to save money.