FIRST THE good news: If the Senate gets its way, newcomers elected this year won’t be able to take advantage of the Legislature’s once-secret, still-obscenely generous pension system.
Now the bad news: Any incumbents those newcomers manage to unseat will still be able to keep growing their pensions, at super-subsidized prices, courtesy of you and me.
So will anyone who has left office voluntarily or involuntarily, at any time. Along with all the returning legislators.
The General Assembly Retirement System, which allows our part-time legislators to draw pensions that are larger than those received by the typical full-time state employee, would no longer accept new members under the pension-reform legislation the Senate passed last week (H.4967).
This is no small thing. This is the closest we’ve come to any sort of reform — actually, the first time reform has been seriously considered — in more than a decade that I’ve been writing about the Legislature’s special little perk. And it’s a big reform.
It means that new legislators who want a state pension would have to join the much-less-generous system for regular state employees. It means that eventually there will not be a special legislative pension system.
But it’s not a done deal yet; the House still has to sign off on it, which is far from certain. And while the Senate plan ultimately gets us where we need to be, it still leaves a lot of people getting a lot of unjustifiable perks for years to come.
I’m still not convinced that part-time legislators should receive any sort of pension. But leaving that aside, there are three problems that are peculiar to the way the Legislature constructed its special pension system.
The first problem is that taxpayers subsidize legislative pensions at more than double the rate we subsidize regular employees’ pensions. For every dollar legislators put into their system, taxpayers contribute $3.89; for every dollar most state employees contribute, we contribute just $1.47.
Although the competing plans passed by the House and the Senate both propose to increase the contribution rate for legislators, they propose to increase the contribution rate for regular state employees by even more. That means the super-subsidy would continue until all current and former legislators die off.
The second problem is that legislators can elect to stop receiving their salaries and instead collect their pensions while they continue to serve; because of that super-subsidy, this means they can collect a pension of as much as $33,000 instead of a salary of $10,400. The House plan would stop any more legislators from choosing this option. That makes sense, but while this facet of the system has gotten the most attention, it’s probably the least egregious. That distinction falls to the third problem.
The third problem is that former legislators can keep purchasing credit in the system at that same super-subsidized rate even after they leave office. Even if voters kicked them out of office.
It’s hard to imagine a justification for this perk for former members — in fact, there’s reason to think it might violate federal pension laws — yet no one in the House or the Senate has even proposed to eliminate it.
Sen. Greg Ryberg, one of the few legislators who was openly critical of the legislative perk before it became popular to at least pretend to oppose it, told me that the pension-reform panel he led didn’t address the third problem because it decided to apply changes only to new employees.
That’s smart, because pension law is filled with legal landmines, and our state has paid an obscene amount of money in damages and attorney fees for changing the rules for current or retired employees. Although our Supreme Court has not yet declared pension benefits a contractual right, protected by the Contract Clause of the U.S. Constitution, many state courts have, and the only approach to pension reform that is 100 percent safe is one that applies only to new employees.
There’s just one problem with Sen. Ryberg’s argument: The Senate, at the unanimous recommendation of the panel he led, already violated that new-employees-only principle, and it did so in order to change a program that many people have either accidentally or deliberately confused with the option for former legislators.
Current law allows state employees to purchase credit for years they worked for other public entities in the past, at high rates. And both the House and the Senate propose to raise the rates for prior-credit purchases to the “actuarially neutral” cost, for both new and current employees. In fact several legislators have pointed to that provision to assure me that they are treating legislators who want to buy extra credit the same way they are treating everybody else.
This program is indeed open to legislators, but they would rarely want to purchase prior credit, since a separate law gives them that great deal on future credit. And under both the House and the Senate plans, current and former legislators will continue to get that great deal — until they die.
While it would be legally dangerous to try to kick out current members, the Senate plan puts legislators in the politically uncomfortable position of preserving their own perk while shutting out people who haven’t managed to get elected yet. The way to ameliorate that political problem is to eliminate the special extra-credit provision for current and former legislators. It’s Section 9-9-40(2)(ii).
I’ve heard from a lot of legislators over the years who say they don’t like the legislative pension system, but there’s no point in taking it on because their colleagues wouldn’t go along, and they’d just alienate everyone by trying. Well, now is the time.
The House could take up the Senate plan as early as today, and it can do one of three things: Approve the Senate changes, and send the bill to the governor; change the bill back to the House version, and send it to a conference committee; or make additional changes to the bill and send it to conference. It won’t do the first. It ought to do the last.
All eyes are on the House, which makes it extremely unlikely that representatives would dare vote against an amendment to abolish the most egregious part of the Legislature’s special pension system.
All we need is someone who’s brave enough to offer it.
Ms. Scoppe can be reached at email@example.com or at (803) 771-8571.