NEWS ALERT: Institute’s exposé: Legislators’ pensions a modern day ‘gold rush’

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(FRANKFORT, Ky.) – A new report by the Bluegrass Institute, Kentucky’s free-market think tank, holds legislators primarily responsible for the commonwealth’s public-pension crisis, noting that politicians of both parties have demonstrated “flat-out greed and disrespect for the public treasury” by adding benefits for political gain and enriching themselves at taxpayers’ expense.

“Defenders of the status quo will try and spin our pension system crisis as being the result of challenging economic times and poor returns on market investments,” said Jim Waters, the institute’s president. “But as this report shows, politicians have been using Kentucky’s pension system for political gain for decades while stubbornly refusing to make the tough decisions needed to protect taxpayers, ensure funding is available for important services and safeguard state workers’ pension funds.”

Authored by Lowell Reese, owner of Kentucky Roll Call, a public affairs publishing company in Frankfort, and a former state chamber of commerce executive, the report, entitled “Future Shock: Kentucky Politicians’ Opulent Pensions Have Become A Modern-Day Gold Rush,” names both current and previous legislators who personally benefited from critical votes approving House Bill 299 in 2005.

This bill made several changes to legislators’ pensions:

  • The policy known as “reciprocity” was adopted. Not only did the law lower the number of high-salary years used to figure lawmakers’ pensions from the previous “high five” to “high three” years, it allowed them to significantly enrich their retirement plans by basing their legislative pensions on jobs they get in other government entities covered by one of the six state-administered pension systems after they leave the legislature.
  • HB 299 also lowered from 30 to 27 the number of years legislators must serve before they can start drawing their pensions prior to age 65 without an early penalty withdrawal.
  • Any member not in the legislative retirement plan as of 2005 could still join and be eligible for the bonanzas to come. The utter lack of transparency involving the state’s pension systems makes it impossible to know how many legislators participate in this gold rush.
  • The legislators’ “assumed” salary amount of $27,500 – used previously in the formula to figure pensions – was replaced with their real salaries. Like one stroke of a canoe paddle can significantly alter its course, the slightest change in the formula can considerably inflate a pension check, as this one does.

Along with noting the 30 state senators (13 Democrats, 17 Republicans) and 48 representatives (30 Democrats, 18 Republicans) who voted for HB 299, known as “the greed bill,” the report also portrays Frankfort as “a culture of pensions” where “it’s common to find people drawing two, or even three, government pensions.”

The fact that “legislators have joined the parade” could have a corrupting influence on the legislative process.

“We don’t know if the governor is keeping a list,” it states. “What we do know is, Gov. Beshear has received many requests for state jobs from members of the House and Senate – not jobs for their constituents, but positions for themselves for the pension benefits they offer!”

While politicians no doubt will try and blame the economy, the report points out that the primary culprit contributing to the Bluegrass State’s pension crisis is benefit creep – the gradual padding of pensions and fringe benefits that only legislators can authorize.

“The main message of this story resides in the subsurface — the attitude of the General Assembly … demonstrated by flat-out greed and disrespect for the public treasury, which now has put the standard of living of all Kentuckians in jeopardy,” Reese writes in the report.

A timeline in the report shows how that for decades, political leaders from both parties have displayed benefit-benevolence at taxpayers’ expense in the form of adding pension benefits, going all the way back to the administration of Gov. Simeon S. Willis (1943-47), when teachers were allowed to “buy” up to eight years from teaching in another state.

Previous reports in this series include Future Shock: Legislators stoking the coals on Kentucky’s runaway pension train and Future Shock: Kentucky’s public pension hole: deep and getting deeper.

 

Comments

  1. To rub salt in the wounds they believe they are worth these FANTASTIC Pensions. They are living the dream. So unfair for those in the private sector.

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