AUGUST 28, 2018

Loophole lets Kentucky politicians take pensions then get re-elected. Is that wrong?

FRANKFORT, Ky. – Two Kentucky prosecutors who retired because of the uncertainty surrounding year’s pension reform could find themselves drawing paychecks in addition to their retirement checks.

Former Anderson County Attorney Bobbi Jo Lewis and former Commonwealth’s Attorney Laura Witt both said they retired with the intention of returning to office in January if re-elected — a prospect that seems likely since no candidates have filed to run against them in November. 

If so, they will become what some call “double dippers,” drawing their full lifetime pension benefits from Kentucky Retirement Systems while being paid annual salaries of more than $120,000.

Their pensions are not a matter of public record, as is the case with every member of the system. But both Lewis and Witt have at least 27 years of service credit with the system. Under the formula used for most state employees in non-hazardous jobs, a member with that amount of service credit whose average salary for the highest five years of pay was $120,000 would draw an annual pension benefit of $64,800.

They say they took a perfectly legal option available to them, and both point out that they’ve been hardworking public servants for many years — all the while contributing to their pension benefits.

But the situation has raised some eyebrows among state legislators.

“I am greatly offended by the actions of two supposed public servants to game the system,” said state Rep. Jerry Miller, a Louisville Republican and co-chairman of the state’s Public Pension Oversight Board. Miller said he has asked Kentucky Retirement Systems to review the situation to determine if there should be a loss of benefits when the two are re-elected.

Rep. Jim Wayne, a Louisville Democrat, said the law should be changed so such officials cannot draw pension benefits while holding office. “It’s more apparent we do that now because of the difficulties we’re having with the pensions and also the difficulties people have trusting public officials,” Wayne said.

Any impact of any two surprise retirements on the troubled Kentucky Retirement Systems — which has about 370,000 members and pays about $2 billion a year in benefits — would be “negligible, at best,” said David Eager, executive director of Kentucky Retirement Systems.

According to records filed with the Kentucky Registry of Election Finance, Lewis is 55 years old and lives and lives in Lawrenceburg; Witt is 52 and lives in Shelbyville.

They say their decisions to retire were prompted by family considerations as well as uncertainty over how the pension reform law passed in late March would affect them.

“I’m just one of the thousands of people who have retired over the last six months who have felt that uncertainty because of the changes that have been made,” said Lewis, who is a Democrat. “… When it comes to something I’ve been counting on who’s got so many years of experience in, I’m not going to take a chance.”

Witt, who was commonwealth’s attorney for Anderson, Shelby and Spencer counties, said she is not double dipping because she said that term refers to situations where retirees who return to work begin accruing a second pension — a practice banned by state law for public employees since 2008.

“You look at the facts and make a knowledgeable decision,” said Witt, a Republican. “It’s a decision each person has to make on their own. I don’t judge other people on their decision. And I hope they would not judge me.”

Rep. Miller said there was no reason for their concern because the new bill had no significant impact on pensions of such longtime state employees.

Kentucky’s eight combined pension systems report combined debts of $43.8 billion, giving the commonwealth among the very worst-funded public pension systems in America.

Concern about pension reform legislation to address the crisis helped cause a 17.5 percent increase in retirements in the fiscal year ended June 30 within Kentucky Retirement Systems, which covers state and local government workers and school employees who are not teachers.

In this year’s legislative session, Republican majorities in the General Assembly greatly scaled back earlier proposals that called for deep benefit cuts and passed a bill that largely cuts benefits for teachers to be hired in the future.

That bill, Senate Bill 151, has been challenged in a lawsuit by Attorney General Andy Beshear, who won a ruling in Franklin Circuit Court striking down the new law. Gov. Matt Bevin has appealed that ruling to the Kentucky Supreme Court which will hear the case Sept. 20.

The law’s biggest changes affect teachers. It puts future teachers in a new “hybrid” plan that’s more like a 401(k) retirement plan rather than the current traditional pension plan with defined benefits.

For state and local government workers, the benefit changes are small, such as one that requires the average highest five years of salary used in calculating a retirement benefit be based on the salary earned for five full years, rather than four full years plus the annualized salary of as little as one month worked.

Lewis and Witt said they had no intention of retiring last November when they filed for re-election, or even long past Jan. 30 when the filing deadline expired and each learned no one had put their name on the ballot to oppose them.

“Did I set out to create a situation where I would be a double dipper at the same job? Absolutely not. How could I possibly have anticipated what the legislature was going to do?” Lewis said.

Lewis had worked 27 years in the county attorney’s office and purchased two years of service in the system, giving her 29 years of service credit in her pension. She was eligible to retire without penalty after 27 years. As county attorney she received $74,468 a year from the state and $39,964 from Anderson County for a total salary of $123,328.

When the session ended she was uncertain about how the new law would affect her pension, particularly concerned about language that she said might give the legislature authority to suspend what is known as the “inviolable contract” and reduce her benefits when parts of the law were to take effect July 1.

She said she called Kentucky Retirement Systems three times in the spring asking for clarification. “The answer I got was, ‘We don’t know. We’ve asked for clarification,’ ” she said.

Eager, executive director of Kentucky Retirement Systems, said in a statement he was prohibited by law from commenting on any individual member. “When consulting with members, we can only comment on the facts. That is to say, we can tell them what their benefits will be if they chose to retire, but we cannot advise them as to when they should retire,” Eager said.

But Lewis said, “Now, when you’ve got 29 years in and believe they can go back and change (your pension) in a major way, wouldn’t you be kind of cautious?” 

Miller said the section of the new law Lewis was concerned with deals with future employees and future changes made in pension law and does not affect employees like Lewis.

Because she was uncertain and because her husband had scheduled surgeries for both of his knees this summer, Lewis said she decided to retire, effective May 31. “Family first,” she said. “… It’s not something I did light-heartedly. … I’ve been open and transparent in this whole situation. I don’t have anything to hide. I realize that some people may not appreciate it, but it’s not what I set out to do.”

Witt said she had no plan to retire early this year, but like many public employees was concerned about changes made by the new law – plus possible changes that could be made by the General Assembly in the future.

“I think everyone is concerned we will lose many of our benefits, particularly those of us in our later years of service,” Witt said. “It’s just the general attitude toward the pension in itself.”

She said she consulted Kentucky Retirement Systems, learned she had attained 27 years of service credit and decided to retire Aug. 1.

“I’ve devoted my entire career to public service and still have a desire to work for the public and meet the needs of justice in my community,” Witt said. “… I look at this as an opportunity and certainly not one of double dipping or that I’ve been trying to do something unsightly.”

Anderson County Judge Executive Orbrey Gritton has appointed Tiffany Azzinaro to fill the rest of Lewis’ term as Anderson County attorney. Carrie McIntyre is serving as acting commonwealth attorney for Shelby, Spencer and Anderson counties until Gov. Matt Bevin appoints a replacement to fill the rest of Witt’s unexpired term.

By Tom Loftus
Louisville Courier Journal