Sylvia Lovely, who resigned this week as executive director of the Kentucky League of Cities, signed a separation agreement Friday in which she relinquished most duties to her deputy and agreed not to sue the League.
Lovely will draw her benefits and salary of $331,000 through Dec. 31, and will have use of such perks as KLC-provided home Internet service and a cell phone. Her expenses will continue to be covered.
Earlier this summer, she stopped using the League-provided BMW SUV.
Lovely will "complete certain projects" and help her successor transition into the job.
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All of her other duties will be taken on by Neil Hackworth, the deputy director and chief operations officer, according to the agreement.
Lovely also released KLC from liability for claims of defamation, additional wages and wrongful termination.
The agreement, provided to the Herald-Leader late Friday by KLC, shows that Lovely was given the document Tuesday. It required her to announce her resignation by the close of business that day and would take effect Dec. 31.
"Thereafter, no other public announcements shall be made by employee in her capacity as a representative of KLC unless approved by the KLC executive board," the agreement says.
Lovely has remained out of the public spotlight since then and didn't appear with KLC officials at a legislative committee meeting Wednesday. Lawmakers grilled leaders of the organization, as well as officials of the Kentucky Association of Counties, about expense policies, oversight and reforms made since Herald-Leader articles outlined spending at both groups.
Lovely, Hackworth and Insurance Administrator William Hamilton spent $300,000 over three years on travel, meals and other expenses.
Lawmakers also questioned some of the compensation policies at the League.
For example, KLC forgave nearly $100,000 of $272,000 in loans it made to Lovely, Hackworth and Hamilton for them to buy additional time in the state retirement system.
The rest of the loans were subtracted from their salaries between November 2004 and December 2007.
Those loans came under fire from legislators on Wednesday.
"I've got a problem with that," said state Sen. Damon Thayer, R-Georgetown and co-chairman of the Interim Joint Committee on Local Government.
During that committee's meeting Wednesday, Thayer asked Mike Miller, KLC's incoming president and the mayor of Jackson, whether the League's board would stop offering loans to employees to buy time in the retirement system. KLC employees are part of the the Kentucky County Employees Retirement System.
"It's a policy we will look at," Miller responded. "As of this time, I can't see it being continued."
Miller later said he wasn't aware that KLC had forgiven more than a third of the loans.
The League made five-year loans to the three top officials in August 2002 as a retention incentive, said Douglas Goforth, KLC's chief financial officer.
It wasn't until November 2004 — after a compensation consultant recommended higher salaries for Lovely, Hamilton and Hackworth — that the board decided to take the loan payments out of their salaries.
Two other KLC employees also received loans, which were forgiven in total.
Legislators also questioned the need for high-paid KLC employees, such as Lovely, Hackworth and Hamilton, to be included in the Kentucky County Employees Retirement System.
Hackworth's total compensation package is more than $246,000; Hamilton's is more than $225,000.
"I am troubled that people with such high salaries are in the pension system," said Rep. Arnold Simpson, D-Covington, during the committee meeting. He said the system was conceived as a safety net and benefit for rank-and-file state and county workers.
Simpson recommended that the League offer its next executive director other retirement benefits, such as matching contributions to a 401(k) plan, like many private firms.
Lovely, who has 22 years of service at KLC and five years she purchased with the help of a $125,000 loan from the League, is currently eligible for a pension of between $9,500 and $11,000 a month when she retires, according to estimates by a state retirement system benefit calculator.
That would make her annual benefit as much as $132,000 a year.