Legislative update: Fear is behind the impasse on meaningful pension reform

By Rep. David Floyd
50th District State Representative

Tuesday, March 5, 2013, 10:30 p.m. — It’s time. We’re in the last full week of this year’s regular session, and we haven’t done our biggest job – again. There is near-universal agreement that our number one job this time is reform of the state’s pension system for public employees. SB 2 is this year’s proposed solution. We’ve been delaying true reform for as many years as I can remember.

So a fair question is “why can’t you people in Frankfort come to an agreement over important matters like budgets and pensions? Why can’t you do your job?”

Fear is behind the impasse on pension reform. Public employee unions don’t want change, no matter what the cost. State retirees’ associations side with the unions. Both of these groups incite their members with fear and, in my opinion, misleading information. And one political side of the debate is fearful of a union backlash if change proceeds.

I’m sure every legislator would love the opportunity to act as mediator between the President of the Senate and the Speaker of the House on these and other matters. For pension reform, they’d each acknowledge that we cannot keep going the way we are; that compromise is necessary for the good of the Commonwealth and her future generations; and that the nature of compromise is that no interest group will be completely satisfied in the end. Then, I’d ask the President to give up fighting COLA’s and the Speaker to give up fighting the hybrid plan for future employees. Done.

Then comes funding, where it is apparent on a macro level that Kentucky already has enough revenue to fund the pension system; we just spend it in other ways. So the difference here is that one side wants additional revenue, while the other wants to prioritize where we do our spending.

I wondered what others might do differently if they were in my place. I remember one man who was angry that the House passed a bill he didn’t want. I told him I’d voted against the bill, met privately with other legislators, published a column opposing it, and debated on the House floor against it. What more would he have done, I asked? He said he’d have grabbed them by the collar and shook some sense into them.

And that’s what I’d like to do when it comes to legislative pension reform. There are two issues here: One is whether or not part-time legislators deserve a pension; the other deals with the matter of “reciprocity” for legislators. Reciprocity permits a legislator to use their highest salary from any state service to compute their benefit from the legislative retirement plan. So a legislator who moves from the legislature to, say, a cabinet post would use a $100,000 + salary in a high-three calculation (“high-three” means the average of three highest salaries during any qualifying service).

You can easily compute a ballpark for a legislator’s retirement. Multiply the number of years’ service times 2.75%. Then multiply that by the high-three salary average which, for most legislators, is about $35,000. So a person with 20 years part-time legislative service would receive a pension (starting at age 65) of about $1600 per month.

But if that same person moved from the legislature to a judgeship, the calculation is based instead on the high-three as judge. So the revised pension would be about $6000. Per month. Doesn’t that call for grabbing someone by the collar and shaking vigorously?

It also applies if you move from a school/city/county/state job to the legislature, and leaders in the House and Senate use the reciprocity incentive to recruit candidates who are already serving in another capacity. This might explain why my bills eliminating legislative pensions (HB 20) and reciprocity (HB 21) have been ignored in the House. I amended some bills in the House so that we could vote to eliminate reciprocity, but the House majority declined to permit them.

But there is hope. The Senate has passed SB 7, which eliminates reciprocity and holds current members accountable for their personal choice on reciprocity. Now, the House can continue to ignore what every other Kentuckian believes is best, or take up the bill and put things right.

The best part of my job is hearing from you. Senator Jimmy Higdon and I will be at “Coffee with Dave” this Saturday at New Haven City Hall. We start at 10:00, and hope to see you there!

-30-