Saturday, July 27, 2002

Pension boost overturned

2000 action had given legislators nearly double

By Mark R. Chellgren
The Associated Press

        FRANKFORT - A late-night action by the 2000 General Assembly that has nearly doubled pensions for legislators in the last two years was improper and must be overturned, the Court of Appeals ruled Friday.

        A divided court said changes in pension laws for public employees must be accompanied by an actuarial analysis before either the House or Senate considers the bill. The analysis must include such items as the projected cost of the change going out at least 10 years.

        The court said the General Assembly asked for such an analysis, but the Judicial Form Retirement System, which oversees the pension plan for legislators, was unable to provide one for reasons that were not outlined.

        Donna Early, director of the retirement board, said she did not know if the ruling would be appealed.

        Ms. Early said no pension benefits have been paid out under the terms of the 2000 change in the law, though the legislative branch has been making contributions at the higher rate, which could be refunded if necessary.

        The statute requires more than a request for a study in pension laws, Judge Wil Schroder wrote in the 2-1 opinion. “It requires or mandates the study with certain results laid out and attached to the bill for consideration before the bill can be enacted,” Judge Schroder said.

        Judge William McAnulty joined in the ruling. Judge David Barber dissented, but gave no explanation.

        Legislators do not receive an annual salary. They are paid for each day they spend on legislative work, increased each year for inflation - $163.56 for most legislators this year. For pension purposes, the assumed salary for for legislators has been $27,500 since the retirement system was created.

        Late in the 2000 session, Sen. Albert Robinson, R-London, added a provision to an unrelated retirement bill that the retirement system board said changed the assumed salary to more than $40,000.

        Some legislators complained about Mr. Robinson's action, which many said they did not know raised their pensions. But nothing was done to repeal the law when the legislature returned in 2000 or 2001. In 2002, there was another change made in the legislative pension law - adopted by a voice vote - that made the assumed salary for lawmakers retiring this year $50,301.

        Legislative pension is earned based on years of service and when an individual was elected. For lawmakers elected in 1978 or before, it takes 20 years to get full retirement. Others can earn full retirement in 24 or 28 years. Most current lawmakers have to serve 36 years to earn full benefits, but there are many different ways to obtain or buy service time in the retirement program.

        Attorney General Ben Chandler objected to the way the pension increases were engineered, calling it subterfuge. The Court of Appeals did not rule on Mr. Chandler's argument that the original change was unconstitutionally vague.

        Because the actuarial report was not obtained, the change in the law is void and “the remaining arguments become moot,” Judge Schroder said.

        The ruling may still be appealed to the Kentucky Supreme Court.


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