The Kentucky League of Cities executive board meeting had barely begun Friday morning when executive director Sylvia Lovely said she was suspending three executive perks:
■ Paying for the travel of spouses of top executives;
■ Dining at Azur, a Lexington restaurant co-owned by her husband, Bernard Lovely;
■ Driving a League-provided BMW SUV; instead she will either buy it or get a car allowance.
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Lovely wanted to take these three items "off the table" as the board works on a review and possible overhaul of League policies and procedures, she said.
"I insist, if I may be so bold, that we do need such a review," Lovely said. But, she added that she didn't want the board to have to answer questions about such items.
The perks were recently highlighted in Herald-Leader articles about the salaries and expenses of top officials at the League. The examination showed that three executives spent more than $300,000 in three years on travel, hotels, meals and other items, including $20,000 at Azur.
Lovely stressed that League board chairwoman Connie Lawson had been pressing for a board retreat since last year to discuss board policies. A press release from the KLC on Friday said the board's review was "coincidental" to the Herald-Leader stories.
Lawson, the mayor of Richmond, said she will appoint a special committee to undertake the review and report to the board in the fall. The committee will also look at a series of recommendations for public boards made by State Auditor Crit Luallen.
Board members voted unanimously to approve the creation of the committee.
KLC is a membership organization that provides lobbying, finance and insurance services for cities. It is the third group, after Blue Grass Airport and the Lexington Public Library, to change its policies following an examination of expenses by the newspaper.
"I think we're moving in the right direction," said Louisville Mayor Jerry Abramson, a board member who called for the League to change its policies. "I'm appreciative of the leadership of the director," he said.
In 2008, Lovely had a total compensation package of $317,655, including the use of the luxury car. Two officials from the St. Louis office of the Lockton Companies, a consulting firm that looked at the League's salaries in 2008, came to the meeting to explain the study that proposed a $31,000 raise Lovely received last year. The 2008 study cost the League $7,500.
Because the League does not offer bonuses or incentive payments, it was important to raise executive salaries to competitive levels, said Lockton's Mary Mosqueda. The salaries were compared to national non-profits, membership groups, insurance companies and professional service organizations.
Mosqueda said the company did not adjust the salary recommendations for the cost of living and salary averages in Kentucky. "We always use national data because you're recruiting from all across the country," she said.
However, she said when Lockton looked at the League's staff salaries, they did use local comparisons. There were no major changes in staff pay. That portion of the study cost $26,000.
The board went into executive session for about 45 minutes to continue to discuss salaries Friday.
Lexington Mayor Jim Newberry said he thinks there will be more discussion and consideration of salaries. In a May 27 letter to Lawson, he had asked for a reassessment of League compensation compared to municipal salaries. He also asked for several of the measures that Lovely announced, including an end to the League paying for spousal travel and doing business with relatives of League employees.
"I think the entire structure will be reassessed," he said after the meeting. He was pleased with the committee's creation. "Everybody would like that to happen as quickly as possible."
Luallen, the state auditor, said that she was encouraged by the board's actions.
"We will continue to monitor the progress of the special committee as it works to further review the board's financial oversight policies," she said in a statement. "It is vital that the end result is increased accountability and transparency."
The League has little oversight aside from its board of directors. However, its division that provides insurance to cities is under scrutiny from the state Department of Insurance, which has requested a meeting with League officials.
"The Herald-Leader article raised some questions we wanted to discuss in greater detail," said Ronda Sloan, a spokeswoman for the department. She would not say exactly what those questions were.
William Hamilton, the League's insurance director, rents office space in Georgetown to Collins and Co., one of the League's major contractors.
City dues won't go up
The board also discussed salaries as part of a budget presentation for next year. The KLC staff will get a 1 percent cost-of-living increase, but executive staff members will receive no raises this fiscal year.
The economic crisis means that dues for city membership will stay the same. Dues range from $335 for small towns to $26,000 for Lexington and Louisville.
The League receives the majority of its revenues from dues, city insurance premiums of about $44 million a year, and loan payments. The League has loaned out $500 million for public projects since 1987. The for-profit arm of insurance services, the KLC Insurance Agency, gets about $1.49 million in commissions from private insurance companies that provide health and life insurance to city employees.
In addition, the League receives $175,000 from the Cornerstone Partners Program, in which private companies pay fees to the League for services, including space at their annual convention and advertisements in KLC newsletters.
Lovely said she hoped the new committee's work would be done quickly.
"I only want to help this organization and these cities," she said.
Lovely announced at the beginning of the meeting that she intends to file a police report because of what she called a "death threat letter" that appeared in the Herald-Leader's letters to the editor on June 13. The letter referred to executive directors of the Lexington Public Library and the Kentucky League of Cities.
The Herald-leader had previously written about the expenses of the Lexington Public Library's chief executive Kathleen Imhoff. Police spokesman Ron Compton confirmed that Imhoff had filed a report charging "terroristic threatening in the third degree," a misdemeanor, but he declined to comment further.
"I felt it was violent and easily could be construed as a death threat," Imhoff said.
Letter writer Twain Lawrence, a Lexington resident, said his letter, which made reference to a slaughterhouse, was intended as a metaphor.
Vanessa Gallman, the Herald-Leader's editorial page editor said: "I considered the letter a metaphor, not a threat."