Senate president says public employees must realize pension system is ‘broke’
As the General Assembly resumes its debate over pensions — who should get one, who shouldn’t and how should Kentucky pay for what’s owed — public records show that some of state government’s larger pensions belong to current and former legislators, who serve part-time at the Capitol.
There are 186 retired legislators drawing pensions from their own separately managed retirement system, with an average annual payout of $23,934. (They also get free health insurance for themselves and their dependents.) By comparison, the average payout from the largest pension fund for retired state government workers is $21,587. For retired local government workers, it’s $11,739.
But those are just rank-and-file averages. Thanks to a pension-sweetening law the General Assembly passed for itself in 2005, nearly two dozen past and present legislators collect or expect to get lifetime pensions above $50,000 a year — roughly twice the state’s per capita income. And that’s on top of whatever retirement plans they’ve made elsewhere in their full-time jobs.
Members of the $50,000 club include Senate President Robert Stivers, R-Manchester, who is in line to collect $56,448 a year when he retires, and former House Speaker Greg Stumbo, D-Prestonsburg, who is drawing $77,196 a year as he runs for attorney general.
“When you look at the legislative pension system, it’s proof that defined-benefits pensions can work — if you want them to. If you properly fund them. If you properly manage them,” said Louisville firefighter Brian O’Neill, a a member of the Kentucky Public Pension Coalition that is lobbying in Frankfort to protect retirement benefits for public employees.
“Unfortunately,” O’Neill said, “what’s happening for legislators is not what’s happening for state and local government workers.”
Topping the charts with his $154,908 annual pension is 68-year-old former state Rep. Harry Moberly Jr., D-Richmond, who retired from the legislature in 2010 after three decades. Moberly, a House budget committee chairman, made about $41,000 a year at the end of his career.
How did $41,000 in legislative compensation become a $154,908 legislative pension? Moberly was able to take advantage of several changes the General Assembly passed with House Bill 299 in 2005.
Instead of multiplying their years of legislative service against an assumed salary of $27,500, as they once did, lawmakers now can use their true legislative compensation, which is likely to be in the range of $30,000 to $40,000, or higher for better-paid legislative leaders.
Or more lucratively — this is what Moberly did — if they can get a high-paying job at a state or local agency enrolled in one of the state’s other public retirement systems, they can multiply that salary against their years of legislative service. Moberly boosted his pension by spending several years as executive vice president at Eastern Kentucky University, making an annual salary of $168,000.
In an interview this week, Moberly said he spent 21 years climbing the ranks at EKU, starting as a visiting professor in 1988. He did not take an EKU post near the end just to enhance his legislative pension, he said. However, having opened a legislative pension account when he was elected to the House in 1980, he legally was required to stick with that for his retirement benefits, he said.
“I tend to stand out because of my amount. But I will say that it’s not unusual for a higher ed pension to be that high, if you think of it as a higher ed pension,” Moberly said. “I don’t think that I should be criticized for having achieved.”
Moberly actually gets more than $154,908 a year. That’s just his legislative pension.
In 1998, the legislature passed a law so its members could open a second account in another public pension system once they maxed out their legislative pensions. As a result, Moberly gets $6,720 annually from Kentucky Retirement Systems on top of his legislative pension, bringing his total state retirement benefits to $161,178. Stumbo, the former House speaker who served as attorney general from 2004 to 2008, gets $17,911 in annual pension benefits from KRS, bringing his total state retirement package to $95,107.
In the years after the “reciprocity” rule was adopted in 2005, richly rewarding even a short stint in a public post with high pay, longtime lawmakers quit the General Assembly to accept judgeships or jobs with six-figure salaries in the state’s executive branch, all of them swiftly fattening their legislative pensions in the process.
There were other enhancements in the 2005 law, too. Legislators could average their highest three years of compensation to determine their pensions instead of their final five years, and they could tap their pensions after 27 years instead of 30 years.
Moberly, who voted for the 2005 law, said most legislators did not understand it at the time. The pension-sweetening language was contained in a committee substitute crafted by Senate Republicans and rushed through both chambers in a single day. Then-Gov. Ernie Fletcher allowed it to become law without his signature.
“Reciprocity was drawn up over in the Senate, passed in the House and approved in just a few minutes,” Moberly said. “If you’ll note, all of the leaders in the Senate today were there at the time and voted for it. It was very hush-hush. I, like many other people, didn’t know what was in it. I thought it was supposed to be some sort of a cleanup bill.”
Stivers, the current Senate president, was among the majorities who voted for the 2005 law. In a prepared statement this week, Stivers spokesman Noah Lucas said the senator has worked more recently to pare back legislators’ pension benefits.
For example: Because of changes the General Assembly passed in 2013, new state workers and legislators no longer get traditional pensions. Instead, they are enrolled in cash-balance accounts that combine different elements of defined-contribution and defined-benefits retirement plans. And legislative retirees are forgoing their annual cost of living adjustments, just as state retirees are.
But the Republican-led Senate could not get the formerly Democratic-led House to move on bills dealing with pension reciprocity, Lucas said. Later united under the GOP, the legislature’s pension bill last year had a provision that would have ended reciprocity, but the entire bill was lost when the Kentucky Supreme Court ruled unconstitutional the manner in which it was passed.
“Unfortunately, that important reform cannot go into effect along with the other needed reforms contained in the bill,” Lucas said.
Legislative pensions exceeding $50,000 a year
Retired and drawing a pension
1. Harry Moberly Jr. Democrat. Former representative, Eastern Kentucky University administrator. $154,908
2. Lew Nicholls. Democrat. Former representative, judge. $132,264.
3. J.R. Gray. Democrat. Former representative, labor secretary. $117,732.
4. Dan Kelly. Republican. Former Senate majority leader, judge. $104,232.
5. Tim Shaughnessy. Democrat. Former senator, Kentucky Community and Technical College System administrator. $86,004.
6. Greg Stumbo. Democrat. Former House speaker, attorney general. $77,196.
7. Walter Blevins Jr. Democrat. Former senator, Rowan County judge-executive. $75,804.
8. Charlie Borders. Republican. Former senator, Kentucky Public Service Commission member. $73,392.
9. Martin Sheehan. Democrat. Former representative, judge. $71,760.
10. Bob Leeper. Republican. Former senator, McCracken County judge-executive. $66,156.
11. Tom Jensen. Republican. Former senator, judge. $62,532.
12. John Will Stacy. Democrat. Former representative, Morehead State University administrator. $60,024.
13. Jody Richards. Democrat. Former House speaker. $58,188.
14. David Williams. Republican. Former Senate president, judge. $56,724.
15. Danny Ford. Republican. Former House minority leader. $55,716.
16. Tim Feeley. Republican. Former representative, judge, Kentucky Cabinet for Health and Family Services deputy secretary. $52,380
17. Arnold Simpson. Democrat. Former representative, Covington city manager. $51,276.
18. David Boswell Sr. Democrat. Former senator, representative, agriculture commissioner. $50,712.
19. Kelsey Friend Jr. Democrat. Former representative, judge. $50,400.
20. Richie Sanders Jr. Republican. Former senator, Scottsville/Allen County Industrial Development Authority director. $50,052.
Not retired but will be eligible for a pension
1. Dan Seum. Republican. Senator, former representative. $59,760.
2. Robert Stivers. Republican. Senate president. $56,448.