By John Cheves
Campaigning for the Kentucky House last year, Brian Linder said state lawmakers do not need public pensions.
“When part-time legislators like (House Speaker) Greg Stumbo have full-time pension plans — and in his case, to the tune of $1.25 million on the backs of Kentucky families — it is our responsibility to act,” Linder said Sept. 12 at a Frankfort news conference, flanked by more than a dozen of his fellow Republican legislative candidates.
This year, newly elected state Rep. Brian Linder, R-Dry Ridge, has joined Stumbo in the $63 million Legislators Retirement Plan.
What happened? Linder and several other conservatives elected to the General Assembly in November said they belatedly learned that lawmakers legally cannot reject their pensions. They said the best they can do is enroll in the plan for now and then try to pass legislation allowing themselves to exit. They’ll attempt that during the 2013 legislative session that resumes next week.
However, bills aimed at closing or cutting the Legislators Retirement Plan typically have failed in recent sessions to get so much as a committee hearing from the Senate Republican and House Democratic majorities. Linder acknowledged in a recent interview that he faces an uphill battle.
“We are all new guys, we are all freshmen who are filing this, so I don’t know that we’ll get much traction on getting the bills to the floor for a vote,” he said. “To me, it makes perfect sense. We’ll put it out there and see what happens.”
Linder had not filed a bill on the subject by Monday, but others had. House Bill 20, sponsored by state Rep. David Floyd, R-Bardstown, would close the Legislators Retirement Plan to new members Aug. 1 and allow current members to quit. Senate Bill 12, sponsored by state Sen. Dennis Parrett, D-Elizabethtown, would close the plan to new members Aug. 1 and prohibit lawmakers from sweetening their pensions in the future by taking a short-term job elsewhere in state government. No hearings are scheduled so far.
Those who spoke out against the pension plan said they’re not happy to be stuck in it.
“It’s very frustrating,” said state Rep. Robert Benvenuti, R-Lexington, another freshman who campaigned against lawmakers retiring at public expense.
“I tried not to take a pension, but it’s impossible under the current system,” Benvenuti said. “I was able to turn down the state health care coverage. But the benefits people said ‘You have to accept the pension. There’s no box you can check to opt out.’”
The subject seems particularly relevant this winter as the General Assembly debates changes to the Kentucky Retirement Systems, which provides pensions for rank-and-file state workers and faces tens of billions of dollars in unfunded liability — largely because lawmakers for more than a decade failed to put enough money into KRS. Among the proposals on the table are the elimination of cost-of-living adjustments and a move away from defined-benefits pensions.
Lawmakers avoid the problems of KRS by enrolling themselves in the separately managed and better funded Legislators Retirement Plan, created in 1980. After five years in office, lawmakers are vested for a defined-benefits pension and retiree medical, disability and death benefits.
The average beneficiary gets about $21,000 annually, though they can boost that into the six figures by taking another state job for several years, such as a judgeship or a non-merit position.
Exactly how much each lawmaker collects is unknown because their pensions are exempt from disclosure under the Kentucky Open Records Act. Generally, the best the public can do is make an educated guess based on the funding formula, known salaries and years of employment. That’s what Linder did to project a lifetime pension benefit of $1.25 million for Stumbo, the House speaker who also spent four years as attorney general.
In rare instances, pension details emerge in public documents. For example, according to court records, former state Senate Democratic Leader David Karem of Louisville contributed a total of $23,078 into his retirement plan over his career, and he was approved for a $33,903 annual payout when he retired from the legislature in 2004. So in just his first year of retirement, Karem collected $10,000 more than he paid.
The system is publicly subsidized to make up for such differences. In 2012, taxpayers put more than $1 million into the system while lawmakers contributed $384,292, either 5 or 6 percent of their legislative pay, depending on when they were elected. The overall plan for lawmakers is 70 percent funded, compared to a 27 percent funding level for the KRS pension fund that covers most state workers.
State retirees long have been offended that the General Assembly awards itself special treatment, said Jim Carroll, co-founder of a Facebook community called Kentucky Government Retirees.
“It’s fair to ask why the taxpayers provide pensions for them at all, since most of them either have other jobs outside of the legislature or are retired already,” Carroll said. “I certainly don’t understand how they can come up with all of the money necessary for their pensions but not for state workers’ pensions.”
Linder argued the same point last year on the campaign trail.
At the September news conference, he called for eliminating defined-benefits pensions and retiree health coverage, at least for new lawmakers. He recommended replacing the current system with a voluntary defined-contribution plan, such as a 401(k), that would shift the burden to lawmakers to save enough for retirement. The General Assembly must reform its own benefits before it credibly can fix the state pension system, he said.
“We believe that this is a small step. But it is a first step in the right direction for us to take in eliminating the most predictable crisis in Kentucky’s history,” Linder said in September.
Last week, Linder said he still believes in his campaign rhetoric.
“The public pension system is broken,” he said. “But in the past, legislators have crafted this very nice system for themselves.”