Tom Eblen

Tom Eblen: Sylvia Lovely tries a new tack

Sylvia Lovely
Sylvia Lovely

After taking some hard falls — both professionally and physically — Sylvia Lovely is trying for a comeback.

Lovely retired a year ago as director of the Kentucky League of Cities following a scathing state auditor's report about spending practices, alleged conflicts of interest and board oversight of the organization. The auditor's review was prompted by a Herald-Leader investigation.

Then, last summer, Lovely suffered a series of medical problems, including a broken hip. She now walks with a cane, but is as feisty as ever.

Lovely, 60, is speaking to groups and consulting on community issues around the country. She serves on Morehead State University's Board of Regents and is raising money for research into ovarian cancer, which killed her mother.

She also has formed a consulting firm, Sylvia Lovely & Associates, and is trying to market her services to help executives and organizations manage "reputational risk." Basically, she wants to advise them on how to avoid what happened to her.

Second acts have become common — even celebrated — in American culture. Celebrities, politicians and public figures fall hard amid scandal, only to rise again and reinvent themselves after some degree of repentance.

After looking at the Web site of Lovely's new firm — — I was curious to know more about what lessons she learned from her experience, because she has said little about it until recently.

"Was I perfect? Did I run a perfect organization? No," she said in an interview, adding that neither the newspaper articles nor the auditor's report told the full story. "I should have spoken out sooner."

Lovely remains proud of her work at KLC. During her 20 years as executive director, the organization grew from a small association of Kentucky cities into a politically powerful force with a profitable municipal insurance unit.

State Auditor Crit Luallen didn't question KLC's performance, but she criticized its high executive salaries and perks, its spending and executives' conflicts of interest. Those included $1.4 million in legal fees paid to a law firm whose partners include Lovely's husband, Bernard, and $28,600 in business with a restaurant that he partly owns. The auditor also criticized KLC's board, made up mostly of mayors, for poor oversight.

Lovely said she will advise clients to have written governance policies, review them annually and consider how things that make sense to them might look to outsiders. That wasn't done nearly as well as it should have been at KLC, and Lovely said she accepts much of the blame for that.

But Lovely, whose salary was $330,000 last year, defended KLC's executive pay as being in line with private insurance competitors. She said KLC board members were aware of the alleged conflicts of interest the auditor noted and didn't object.

Lovely's biggest disagreement with her critics is about what standards KLC should have been held to — as a government organization or as a private trade association — and whether those standards and expectations were clear and well-defined.

"Maybe we were too complex, but I did not operate it as a government," she said. "I ran it like a business, and we were successful. I performed under the rules I was given."

The auditor said KLC should be viewed as a part of government because, among other things, its insurance products are bought by cities with public money and its employees are part of the state retirement system.

The auditor's report noted that Lovely is eligible for an annual state pension of more than $165,000, based on 22 years of service and an extra five years' worth of benefits she purchased with a perk from KLC — a $125,000 forgivable loan.

The governmental status of KLC and the Kentucky Association of Counties, whose spending and salaries also were criticized by the auditor following another Herald-Leader investigation, were later confirmed by the General Assembly. Legislation approved overwhelmingly last year made that clear.

But Lovely thinks it should still be up for discussion. "We never really had that debate," she said.

As she seeks a new career helping others avoid risk to their reputations, Lovely said she isn't worried about restoring her own. "I think people are smart enough to see shades of gray," she said. "And I think there were a lot of shades of gray with this stuff."

I suspect Lovely will find an audience of executives who fear that what happened to her could also happen to them. With the economy weak, unemployment high and average people feeling the pinch, there is little public tolerance for free-spending, highly paid executives in either public or private organizations.

"The rules are changing," Lovely noted. And many people think it is long overdue.

I wish Lovely well in her comeback. But it may be hard for her to succeed in this second act until she fully appreciates why the first one ended as it did.