Bills aim to shine light on public pensions

FRANKFORT — Kentucky taxpayers spend hundreds of millions of dollars every year providing pensions for government employees, including state lawmakers, without knowing who gets what.

State law shields information about individual pensions from public scrutiny. Although salary data is publicly available for local and state government workers and elected officials, once they retire, their pensions are exempt from the Kentucky Open Records Act.

That would change under twin bills pending in the House and Senate, aimed at "making the pension systems transparent," in the words of one sponsor.

"Pensions are funded by the citizens of the commonwealth, and I think they have an absolute right to know who is getting what," said Rep. Robert Benvenuti, R-Lexington, who filed House Bill 48 on Jan. 7.

The House bill and a matching proposal, Senate Bill 6, would require public disclosure of retirees' names, final employers and the amount of their monthly benefits. The law would cover the pension systems for state and county employees, school teachers, judges and legislators, in which about 463,000 people are enrolled.

Benvenuti said the legislature needs to debate what kind of retirement benefits the state can afford to offer, especially as Kentucky struggles with billions of dollars in unfunded pension liability that is forcing cuts to other public services. But it's hard to have that debate because the pension systems are cloaked in secrecy, he said.

"Transparency will improve the running of these systems, as it always does," Benvenuti said. "Step one is letting the taxpayers see the value of these public pensions and letting them compare the pensions to their own private sector 401(k) accounts. I think that once people see some of the numbers, they'll demand a change in how we operate, and that's what I'm aiming for."

However, a key Democratic House leader said he will block the bills.

"I think they'll rest comfortably on the House side," said Rep. Brent Yonts, D-Greenville, chairman of the House State Government Committee.

Benvenuti's bill is assigned to Yonts' committee. The Senate bill, if it makes it to the House, likely would go to that committee, too.

All that Kentuckians need to know is the big picture, Yonts said: how much money the pension systems have, how much they owe and whether the government is setting aside enough. The size of any one pension should remain off-limits, he said.

"It's private information," Yonts said. "It shouldn't be available just because someone is nosy and wants to see what his neighbor is drawing for a pension. Not everybody needs to know everything about what's going on in everyone else's life."

Many states, including New York, Illinois and Florida, disclose their pension payouts for individual public employees. New Jersey goes so far as to post its retirees' names and pensions on a searchable website.

Such information has led to front-page headlines and indictments in some cases. In New York, for example, The New York Times and the state attorney general investigated abuses of public pensions by police officers manipulating rules on overtime and outside pay to boost their benefits. One officer retired at age 44 on a $74,000 salary, then started to collect a $101,333-a-year pension.

"The use of public money for outsize retirement pay really stings when budgets don't balance, teachers are being laid off, furloughs are being planned and everything from poison-control centers to Alzheimer's day care is being cut, as is happening in New York," the Times wrote in 2010.

But in Kentucky, lawmakers have rejected past attempts to disclose individual pension payouts. A 1972 law requires the information to remain confidential short of a subpoena or court order.

Jim Carroll, a former state parks worker and spokesman for a watchdog group called Kentucky Government Retirees, said he is personally ambivalent about pension disclosure. But many of his group's members "don't know why there's a need for it. They suspect it's really an effort to demonize state workers, to say to the public 'Look how much they get and you don't.'"

There is a stark difference between the public and private sectors. In 2011, 78 percent of state and local government workers were enrolled in defined-benefits pensions that guaranteed them monthly checks for the rest of their lives, compared to only 18 percent of private workers, according to the U.S. Bureau of Labor Statistics.

And public pensions are heavily subsidized by taxpayers. The primary state pension plan at Kentucky Retirement Systems, for example, holds $2.7 billion and includes 118,325 people, one-third of whom are now retired. Employees' contributions from paychecks provide only 12 percent of the annual revenue, according to KRS. The rest comes from their government employers and investment returns.

The average retiree's payout from that plan is $21,698 a year, although in some instances, retirees collect more than $100,000 a year, according to KRS.

Jim Waters, president of the Bluegrass Institute, a free-market think tank in Lexington, has lobbied for years in favor of public pension disclosure. There can't be any real pension reform in Kentucky until everyone gets a complete look at how the retirement systems operate, Waters said.

Waters said the public knows about some trends, such as lawmakers who fatten their pensions by spending a few years in an executive or judicial branch job, and government workers who "double dip" by briefly retiring, tapping their pensions, and then returning to work. But it's impossible to know what this costs Kentucky without seeing how much the pensions are, he said.

"What can be the legislature's argument against transparency unless some of them have something to hide about their own arrangements?" Waters asked.

"We want to show that most state workers get a very modest pension when they retire, and that's not the problem," Waters said. "The problem is that some politicians and bureaucrats game the system for their own advantage even as it's tanking. Sunlight is a very good disinfectant for corruption."