'Poster boy' for the pension culture

Bobby Sherman’s resignation yesterday as staff director of the Legislative Research Commission should bring no tears over his pension. He walks off the stage with an annual pension in the neighborhood of $128,700 a year — more than $10,000 a month.

We have to apply the weasel phrase “in the neighborhood of” because, unlike public employee salaries, the pensions records of state workers (and legislators) are strictly guarded secrets. Therefore, we can only use the basic formula in calculating Sherman’s pension, which is “years of service X average salary X service credit rating (a % factor).”

If Sherman bought years of “air time” — which means exactly like it sounds, pulling years of service out of the air, up to five years — that would add about $20,000 each year to his pension draw; and if he served in the military, he could count those years, too.

All of this highlights once again, the serious need for transparency in all of Kentucky’s six state-administered public employee retirement systems. There is no federal law that says the pension records must be closed. Kentucky’s records are kept secret under a law enacted in 1972 under Gov. Wendell Ford, when governors totally dominated the legislative branch. Four states have opened their government employee pension records to the public: New Jersey, Ohio, Oregon and Pennsylvania.

The three factors explained

1. Years of Service

Sherman began work at LRC in 1978 and left the institution in 1995 — giving him 17 years of service. He then worked maybe two years in the Kentucky Department of Education, increasing his years of service to 19. He was then hired as LRC director in 1999, serving 14 years in that capacity —giving him a career total of 33 years for pension purposes.

2. Salary

Sherman’ salary when he resigned was $195,000 a year.  He apparently had not received any raises since 2008, when his salary was spiked from $132,000 to $195,000, by mainly then-Senate President David Williams, because Sherman threatened to retire through a narrow window of a temporary law that offered an incentive for public employees to retire early — under the incentive, early retirees were allowed to calculate their pension using a “Hi-3” instead of a “Hi-5” on the salary.

Negotiating a 47 percent salary hike was a brilliant move by Sherman, and a display of disrespect for the state treasury by Williams and the LRC leadership who went along with it — but then that’s an honored custom of legislators, disregarding the cost of pensions while bestowing super-rich pensions on themselves. To read more about this, click here.

By staying on an additional five years, with the higher salary, Sherman increased his pension an estimated $54,000 a year for the rest for the rest of his life

3. Serve credit rating

The percentage factor we used in calculating Sherman’s pension is 2 percent. That’s an approximation.

It is appropriate here to say that SB 2, the pension reform bill enacted in 2013, did not solve the pension crises, contrary to proponents' claims; state employees haven’t had a raise in years; and education funding is in decline — and a big reason for the latter two is, the pension cost is crowding out pay raises, and it’s also crowding out essential government services.

Bobby Sherman could be a “Poster Boy” for the Frankfort culture of milking the pension systems like a big chocolate milk cow.

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New light on sexual harassment allegations

Two female employees in the office of House Speaker Greg Stumbo, Yolanda Costner and Cassaunder Cooper, filed complaints in February with the Legislative Research Commission and in August with the Legislative Ethics Commission, alleging sexual harassment by Rep. John Arnold, D-Sturgis. A third woman, Gloria Morgan, who works at the legislature on the nonpartisan staff, filed a similar complaint against Arnold.

The issue is about more than the sexual harassment allegations. It’s about the integrity of the institution. And it could become a major political issue in next year’s elections, where control of the House chamber lies in the balance.

Even though legislative staff and some of Arnold’s colleagues reprimanded him, and told him to stop bothering the women, he continued the irrational behavior, according to news accounts.

Why would he defy repeated instructions to stop? There could be a valid explanation, different than what has been reported — and that is, Arnold’s mental health.

 

In addition to quadruple-bypass heart surgery about two years ago, he was diagnosed with Parkinson’s disease more than a year ago, and, indications are now he may have Dementia, too. The latter two illnesses can be related. According to Mayo Clinic online, “Many people with Parkinson’s disease eventually develop dementia symptoms (Parkinson’s disease dementia).”
 

According to Activebeat.com, a health-answers resource, “It’s common for dementia patients to suddenly become sexual without awareness that their actions are inappropriate—for instance, removing clothing, exposing oneself in public, or touching and saying tasteless things (emphasis added) to strangers and caregivers.”

A source in Western Kentucky who knows Arnold well told Kentucky Roll Call that Arnold’s “personality has changed; he says things out loud, louder than he normally would, while waving his arms; he’s not discreet; and he forgets things.”

Further, the side effects of certain medications for the treatment of Parkinson’s disease can cause, in some patients, a state of “euphoria” — akin to an alcohol buzz. 
 

Arnold’s illnesses were evident in his campaign for re-election in 2012, a race that he won by just five votes out of 15,779 votes cast. He was too ill from his heart surgery to campaign much; his wife, Sandy, did most of the campaigning. His opponent’s campaign in the fall election was told by a couple of sources in Arnold’s home county of Union that he had Parkinson’s and Dementia. The GOP nominee, Tim Kline, of Daviess County, did not use the health issues in the campaign.  

Leaders meet

When the House and Senate leaders met Wednesday, September 4, in the Capitol Annex, to discuss the Arnold matter, more was revealed than meets the eye. The high level of intensity in the room, and the carefully calculated words, gave off an impression that the legislative leaders were navigating a minefield, sending to the rest of us the message that it’s a mess they’re in. And, if they fail to contain it, what we’ve seen so far could be the early snowflakes of an avalanche. 

The leaders in the House and Senate have a cultivated sense of politics and can usually separate the trivial from the important; in this case, their sixth sense kicked in. They recognize that the media is not in a feeding frenzy yet, but that it could come to that.

They met for two hours in a room filled with reporters; and then they met four hours in executive session behind closed doors.

Republican Senate President Robert Stivers presided. He led the call for the meeting because the LRC staff director, Robert Sherman, and the Democratic Speaker’s office, had not inform the Senate leadership, including Democrats, apparently, that there has been an ongoing sexual harassment investigation since February. Stivers first heard of it from news accounts about three weeks ago, near the end of the special session on re-districting.

In the first meeting, the open one, Stivers sought an explanation, and the House Democrats maneuvered, in effect, to suppress it by trying to keep the meeting open and not go into a closed session, as strange as that may seem. One would assume that open meetings result in more information made public; but in this case, the open meeting had a chilling effect on providing information.

Sherman testified in the open meeting, but he repeatedly prefaced his replies with a precautionary legal point, warning that he could not say much because of the confidentiality language in the agency’s personnel policies and because of possible litigation. Consequently, over the course of two hours in the open meeting, very little of substance was revealed. What we witnessed in Sherman’s testimony was a dance by the Fifth Amendment’s first cousin.

Both sides no doubt expected Sherman to talk more freely in private. So there was a motion by GOP Rep. Jeff Hoover to go into executive session behind closed doors to discuss the issue as a personnel matter. The motion carried, 10 to 5. All five of the House Democrats voted no, saying a closed meeting violated the Open Meetings law, and they walked out.

Stivers said before going into the closed session that it would be recorded, and that the recording would remain under seal unless released by a court order, or by LRC.

Clash of attorneys

Costner and Cooper have hired an attorney, Thomas Clay, of Louisville, who said to the media after the open meeting that this case will be resolved, either through a settlement or litigation. When a reporter asked him whether there have been settlement discussions to date, Clay would not comment.

The claimants and their attorney have suggested that more complaints and lawsuits may be filed, possibly involving other legislators.

Arnold has hired an attorney. If the sexual harassment charges go to court, his health issues are sure to be a big part in a presentation of the other side of the story. 

Outlook

Once Arnold’s health issues become fully known, it could change the game in Frankfort, in terms of the current allegations. Right now, it’s about legislators sexually harassing their female staff. That could shift somewhat to mental illness among legislators, which presents the question, “who’s responsible” for detecting emotional disorders among legislators early enough to prevent sexual harassment?

And it raises several other questions, too. Speaker Stumbo has named a five-member investigated team in the House to recommend whether to censure or expel Arnold. It’s predictable: the House won’t expel a member because he’s sick.

And if the judge’s ruling were favorable to the claimants, the liability would more likely fall on the legislature (i.e., taxpayers) rather than on Arnold. That’s how I see it.  

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Local governments across US cutting hours of part-time employees over Obamacare cost

While the debate goes on over Obamacare — Gov. Beshear says it will create 17,000 new jobs in Kentucky, and Sen. McConnell saying it will destroy the 40-hour work week — the Washington Post reported today that many local governments across the nation, facing hundreds of thousands of dollars in new health-care costs, are cutting the number of hours their part-time employees work. 

Many cities and counties are cutting employee hours 16 months ahead of the effective date of the provision in Obamacare that requires them to offer health-care coverage to all employees who work at least 30 hours a week. 
 

Some local officers are making the cuts early either because of labor contracts that must be negotiated in advance, or because employees who work at least 30 hours in the month leading up the January 2015 implementation date (of the mandatory coverage) would need to be included.
 

The Post reported the following examples: 
 

• Middletown Township, N.J., said it would reduce the hours of 25 part-time workers to avoid up to $775,000 in increased annual health-care costs.

• Bee County, Tex., said it would limit its part-time workers to 24 hours per weeks, when it’s new fiscal year starts Oct. 1.

• Brevard County, Fla., estimates the new mandate would cost the county $10,000 a year per part-time employee; the county’s libraries have already cut hours for 37 employees.

• Lynchburg, Va., has cut hours for 35 to 40 part-time workers.

• Chesterfield County, Va. (south of Richmond) said it likely would cut the hours of “several hundred” employees.

• Chippewa County, Wisc., will drop 15 part-time workers to avoid up to $163,000 in annual health care costs.
 

A senior fellow of economic studies at the liberal Brookings Institution,* a Washington, D.C.-based think tank, told the Post that he doesn’t think Obamacare will be a “big direct-cost burden” to cities and counties. 
 

* The Brookings Institution describes itself as a “independent and nonpartisan,” but a 2011 study examining the political donations of think tank employees, showed that 97 percent of Brookings’ employees’ political donations went to Democrats.

Some political polls are designed to con us

Reprinted from Kentucky Roll Call newsletter, Aug. 15, 2013.

In the world of commerce, the Latin term caveat emptor means that a person who buys something is responsible for making sure that it is in good condition, works properly, etc. In English it’s called “buyer beware,” which applies equally to politics, especially advertising and polling. Consider the following. 

A July 23-24 poll by Republican pollster Wenzel Strategies put McConnell ahead of Alison Lundergan Grimes, 48-40; a week later, the nonpartisan Cook Political Report lowered its rating of a McConnell-Grimes matchup from “lean Republican” to “toss up,” and tweeted an explanation: “given that two polls show the race within the MOE and with Grimes ahead of McConnell in both, it moves to the Toss Up column.” 

What the tweet failed to mention is that one of the two polls was conducted by Grimes’ own pollster, and the other was conducted by Public Policy Polling, a Democratic polling firm, for two Democratic groups opposing McConnell. 

It may surprise you that the respected Cook Report lowered its rating based on partisan polling, which by definition is done to con the public — by Ds and Rs — which the public accepts, when it’s done with finesse. 

Who to trust? The equally respected, nonpartisan Rothenberg Political Report said, following Cook’s change, that it’s keeping the McConnell-Grimes race, “Republican favored” — two notches from “toss up.”

Julian Carroll helped launch McConnell’s career

Reprinted from Kentucky Roll Call newsletter, Aug. 15, 2013.

From 1974 to 1980, Roy Stevens served as a chief aide to Gov. Julian Carroll and to Gov. John Y. Brown Jr. In a memoir, Grass Roots, released this summer, Stevens recounts how Carroll subtly helped launch Mitch McConnell’s political career. It happened as follows: In the 1975 governor’s race, Gov. Carroll was running for a full term, after ascending to the office from lieutenant governor when Gov. Wendell Ford resigned to go to the U.S. Senate.  Jefferson County Judge (judge-executive now) Todd Hollenbach Sr., on the basis of his strength in the state’s largest county, filed to run in the Democratic primary against Carroll. Hollenbach carried Jefferson County by more than 5,000 votes, but Carroll handily won the race.

Stevens writes, “Hollenbach did himself no favors by running for governor in 1975. In 1977, Julian had an opportunity to send that message and underscore that point when Hollenbach was running for re-election as Jefferson County Judge. Hollenbach’s 1977 opponent was a lesser known Republican lawyer named Mitch McConnell. Julian, the Governor and titular head of the Kentucky Democratic Party, was asked about McConnell’s candidacy. Julian’s response was to publicly compliment McConnell, in effect, telling Democratic loyalists in Jefferson County they should feel comfortable supporting a Republican in that particular race. After holding a 44 point lead in early polling, Hollenbach was defeated by McConnell. ... The election launched a winning streak by McConnell, who was first elected to the U.S. Senate in 1984 and is now the Senate Republican Floor Leader.”

[Editor's note: A copy of Roy's memoir, Grass Roots, is available, as the limited the supply lasts, to individuals who donate $20 or more to the Princeton Animal League (PAL), 1300 South Jefferson, Princeton, KY 42445. He may be reached via e-mail at rstevens40@att.net.]

Private-sector workers get government pensions

The following is an editorial from The Kentucky Gazette, Aug. 14, 2013. Reprinted with permission.

It might surprise you to know that the employees of 1,169 entities participate in Kentucky’s County Employees Retirement System. That came to 47,452 retirees and 94,636 employees as of June 2012. Could be more now; could be less.

   Most of these employees are government employees – they work for the water districts and counties, school districts and cities – and they have earned a government pension.

   But some of these people are employees of “instrumentalities” of government; that is, they aren’t true government employees. For this reason, they should not be allowed in CERS.

   We’re certainly not suggesting that the employees of instrumentalities don’t deserve pensions. Rather, we’re suggesting that the pensions shouldn’t be provided at taxpayer expense.

   As we know, most of the revenue in the pension funds is derived from investments (65 percent to 70 percent), and the employees pay into the fund as well (5 percent or 6 percent, depending on their hire date). But, according to Reuters, roughly 20 percent of Kentucky’s pension fund revenue comes from the taxpayer. Depending on the national economic climate and returns on investment, this could be more, could be less. Either way, citizens write the checks to cover the difference.

   CERS, which is one of the three systems under the umbrella Kentucky Retirement Systems had, as of June 2012, an unfunded liability of $3.59 billion in its pension plan for employees in non-hazardous occupations, and a $1.26 billion liability in its plan for employees in hazardous jobs, a total of about $4.85 billion. These obligations mean the plans do not have enough money to fully cover retirees, who’ve earned full benefits, and current employees, who’ve earned partial benefits. The non-hazardous plan had 60.7 percent and the hazardous plan had 58.1 percent of the money the plans need to pay pension benefits, according to the 2012 KRS Comprehensive Annual Financial Report, the most recent available.

   Twenty percent of the $4.85 billion comes to $970 million that individuals, business owners and consumers must redirect from other spending preferences to pay for pensions, and part of that covers people who aren’t government employees.

   Apparently, a number of these entities work under contract with the local governments or exist to provide services to government entities. Take the Kentucky League of Cities, for example, and the Kentucky Association of Counties. It’s been said here before that these two entities, which both own for-profit insurance companies that make millions of dollars a year, should not be part of the public pension system.

 Let’s add to the list the Kentucky Magistrates and Commissioners Association, the Kentucky Judge-Executive Association, the Riverpark Center, and Housing Oriented Ministries, to pick out a few.

    As near as we can tell, Hous-ing Oriented Ministries, a non-profit corporation based in Whitesburg, is a program of the United Church of Christ. Also a non-profit corporation, the Riverpark Center is an entertainment venue that hosts Broadway shows, among other programs. And the magistrates and judge-executive associations should be dropped from CERS because they simply are not government entities.

   To be fair to current employees, those in the system should be able to continue and accept the pension promise that’s been made to them. Going forward, though, lawmakers need to amend KRS 78.510 (3), which gives broad authority to the Kentucky Retirement Systems board to determine which entities can participate in CERS: 

   “(I)f the (retirement systems) board is willing to accept the agency, organization, or corporation, the board being hereby granted the authority to determine the eligibility of the agency to participate.”

   After Kentucky’s General Assembly sets CERS right, then members can start on the Kentucky Employees Retirement System, which has the same problem. KERS participants include Commonwealth Credit Union, the Kentucky Bar Association, Nursing Home Ombudsman Agency of the Bluegrass Inc., Judi’s Place for Kids … You get the picture.

Laura Cullen Glasscock, editor and publisher

Book by Steve Nunn’s ex-wife coming soon

Tracey Damron married state Rep. Steve Nunn, the son of former Gov. Louie Nunn, in 1996. They became one of Frankfort’s best known and liked power couples. But they divorced in 2006. And three years later, Steve Nunn murdered Amanda Ross, his ex-fiancée. He pleaded guilty to the crime in 2011, and is now in prison for life with no possibility of parole.

Damron has written A Trail of Feathers, a book about her life and her marriage to Nunn, and has scheduled a news conference to discuss the book with reporters at 9:00 a.m., Wednesday, Aug. 7, on the Capitol steps in Frankfort.

Kentucky Educational Television host Bill Goodman will interview Damron, about the book and her marriage to Nunn, on his One-to-One show, which airs at the following times.

KETKY  Sunday, July 21 at 9:30 am EDT
KET  Sunday, July 21 at 1:00 pm EDT
KET  Monday, July 22 at 12:30 am EDT
KET2  Tuesday, July 23 at 7:30 pm EDT
KET2  Wednesday, July 24 at 7:30 am EDT
KETKY  Thursday, July 25 at 8:00 am EDT 
KETKY  Thursday, July 25 at 6:00 am EDT
 

Before she married Nunn, Damron was married to now Kentucky Supreme Court Justice Will T. Scott. Both Scott and Damron are Pikeville natives.

A promo on the draft front cover of the book reads, “A true story about one woman’s journey of love, death, murder, political power, deception, the supernatural and consciousness.”

Special elections may break D and R tie

Going into tomorrow’s special election to fill the vacant seat in House District 56, the Democrats hold 68 of the 138 seats in the Kentucky General Assembly — 54 in the House of Representatives, 14 in the Senate. And the Republicans hold 68 seats as well — 45 in the House, 23 in the Senate. There's one independent.

That the two parties are dead even in total representation is interesting but not as significant as it might appear to the legislative untutored, because the Democrats control the House and the Republicans control the Senate, and ruling a chamber is the important thing.

However, the overall tie is very significant for its symbolism. For 20 years now, Kentucky has been a competitive two-party state, in terms of state-house politics (election of governor, constitutional officers and the General Assembly). Local and federal races are different, but that’s a story for another day.

All three candidates in tomorrow’s election reside in Versailles (Woodford County). A win by Democrat James Kay would suck some the wind out of the sails of the Republicans, who have high hopes of capturing control of the House in 2014. On the other hand, if R’s nominee, Lyen Crews, get a victory, watch out for the dancing pachyderms.

But in a small turnout special election — about 25 percent is expected — the outcome is even more unpredictable. Independent candidate, John-Mark Hack, has visions of pulling off a Wallace Wilkinson-style surprise. Older readers will recall the 1987 governor’s race, where, in the Democratic primary, John Y. Brown Jr. and Steve Beshear went head-to-head with so much negativity, Wilkinson (creating a wave with the lottery) surfed in the back door. Conditions seem ripe for Hack to do well, despite not being able to compete financially in this race.

Below is a profile of the current Kentucky General Assembly from Who’s What In Kentucky 2013-2014, the biennial legislative directory produced and published by Kentucky Roll Call. Click here to review the book.