By Jim Waters
Get ready for a lot of talk on the campaign trail next year about how significant progress was made in reforming Kentucky’s bloated pensions system during this year’s legislative session.
The claims will be – to put it kindly – a real stretch.
Considering that it’s impossible for a leopard to change its spots and the fact that the legislature did nothing to prevent beneficiaries – and benefits – from being added in the future, taxpayers are sceptical that the small changes the Kentucky General Assembly made in the state’s retirement systems earlier this year will yield the promised savings.
Though steps were taken to change the legislative pension plan – essentially offering future lawmakers the same type of hybrid-cash plan that new state employees will have – taxpayers will remain on the hook for years because of past practices involving current politicians’ retirement treasure trove.
For instance, Senate Bill 2 did nothing to prevent current lawmakers from supersizing their legislative pension checks by taking other plum government jobs, a practice allowed by House Bill 299 passed in 2005.
The latest to milk the politicians’ pension cow is Lexington state Sen. Kathy Stein, who followed in the footsteps of former Senate President David Williams by accepting a judgeship with its six-figure salary.
When it came to Senate policy, Stein, a liberal Democrat, and Williams, a Republican, could not have been farther apart in their views. But when it involves milking the taxpayers for their retirement, they are two of the many peas in the Kentucky Retirement Systems’ pod.
Like Williams, Stein has made a career out of state politics. She was elected to the Kentucky House of Representatives nearly 17 years ago and then moved to the Senate in 2008.
Since Kentucky’s public-pension systems are a secret as big as the legislative pension bonus that Stein will collect, we can only estimate what her retirement will cost taxpayers.
Pension expert Lowell Reese, who publishes Kentucky Roll Call and was a former state Chamber of Commerce executive, calculates that Stein’s legislative pension – which will be based on three years of her six-figure salary as a judge rather than her 17 years as a part-time legislator – will be more than $860,000 higher than it would have been without the 2005 bill.
Instead of basing her legislative pension on $40,668 – her high-three years’ average as a part-time lawmaker – she will collect a legislative pension based on her high-three years’ salary as a judge, a position that currently pays $124,618. Plus, she will be eligible for a second pension in the commonwealth’s judicial retirement plan.
It’s all too similar to Williams’ pension “bonus.”
But Williams and Stein aren’t the only ones.
Reese estimates that 25 percent of lawmakers in the legislature currently – or those who recently were – will similarly benefit from the Great Pension Spike of 2005.
Agriculture Commissioner James Comer, a former Tompkinsville legislator, commendably cleaned up the mess left by Richie Farmer, the disgraced former commissioner who’s headed for prison after a storybook career as a member of the University of Kentucky basketball team known as the “Unforgettables.”
Yet will Comer, the talented young politician, be as dedicated to cleaning up the repugnant pension system he voted for as a state representative in 2005?
While Farmer’s actions were egregious because he so blatantly used the office to benefit himself, the fact is that when it’s all said, done and written, House Bill 299 – the Pension Greed Bill – will have cost taxpayers more than Farmer’s tenure as an “Unforgettable” Ag Commissioner ever did.
Still, I bet you won’t hear a lot of enthusiasm out there on the campaign trail for the only kind of reform that matters for this contemptible system: getting rid of it altogether.
Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at firstname.lastname@example.org. Read previously published columns at www.bipps.org.