Poll results in GOP primary for Governor

By Lowell Reese
Kentucky Roll Call
Jan. 29, 2015

Remington Research Group, a Kansas City, Missouri political polling firm, released this morning the results of a poll it conducted January 27-28 of the candidates for governor in the Kentucky in the GOP primary election. Remington is a rather new polling firm. It has been in the field in two election cycles, about a year and half. It does national polling in Republican races, and is not affiliated with any candidate, Titus Bond of the firm told us.

Here are the results of Remington’s survey of 1066 registered Republicans who are “likely” to vote in the May 19 GOP primary. The margin of error is ± 2.98%.

Q: The candidates in the Republican primary election for Governor are James Comer, Matt Bevin, Hal Heiner and Will T. Scott. If the election were held today, for whom would you vote?

James Comer    22%
Matt Bevin       19%
Hal Heiner       18%
Will T. Scott      5%
Undecided       35%

Q: What is your opinion of James Comer?

Favorable        31%
Unfavorable      9%
No opinion      60%

Q: What is your opinion of Matt Bevin?

Favorable        30%
Unfavorable    17%
No opinion      52%

Q: What is your opinion of Hal Heiner?

Favorable        33%
Unfavorable    10%
No opinion      58%

Q: What is your opinion of Will T. Scott?

Favorable        12%
Unfavorable    11%
No opinion      77%

The poll was conducted by automated phone calls. The calls began at 7:00 pm Tuesday, after the filing deadline, and continued Wednesday afternoon and evening. Respondents were screened to determine their likelihood to vote in the primary and 35 percent were rejected on that basis.

A combination of the favorable and unfavorable numbers is an approximation of the candidate’s name ID. 

Information about Remington Research Group is at www.remingtonresearchgroup.com

Why Kentucky's a red state and Grimes can't win

(This story ran Oct. 31, 2014 in Kentucky Roll Call.)

Lightning strikes! But it is unlikely that Secretary of State Alison Lundergan Grimes, the Democrats’ nominee, can oust Sen. Mitch McConnell on Tuesday. The race for the US Senate is a federal race where philosophy is foremost and people still don’t know what Grimes stands for. Voters are wondering if she has a philosophical rudder. If so, what does she believe?  What are her inner-soul values?

Candidates in Kentucky can hide their deepest beliefs and still win — if they’re running for magistrate and not a federal office. Grimes has raised a lot of money, but has not spent it wisely; her strategy appears to have been to conduct the race like she’s running for a local or state office.

She’s not the first secretary of state to make that blunder. In 2010, then-Secretary of State Trey Grayson ignored the distinction with embarrassing results. In the Republican primary that year, in the open seat for the US Senate, vacated by Jim Bunning, Grayson lost to Rand Paul in a landslide — 58.8 percent to 35.4 percent — because, after serving six years as secretary of state, and throughout his campaign for the Senate, voters never quite knew what Grayson stood for.

H.L. Mencken (1880-1956), one of America’s most famous journalists of the last century, noted that the nation’s Capitol “represents more closely [than state and local elections] the inner soul of people.” Mencken recognized seemingly that everyone must have something to live for (faith, hope, purpose) as well as something to live on (food, shelter, clothing), and in the realm of government, citizens will always try to send to Washington those who represent their “inner soul.”

That standard doesn’t apply to candidates running for mayor in a small, rural Kentucky town. Those are races that can be won by promising to keep the weeds cut along the road coming into town. 

But farther up the political ladder one climbs, winning depends on philosophy in proportion to the height of the office. On the state level, philosophy first comes into play in General Assembly races. It increases to maybe 50 percent in a governor’s race — the other half is rudderless (pleasing the courthouse crowd, redistributing wealth from the state treasury, playing raw and subtle politics).

Going higher still to the office of president, and in races for the US Senate and House, elections become intensely philosophical, as much as 80 percent or even 90 percent, would be my guess. Kentucky is not a red state in federal elections because Republicans are lucky, are better looking, more intelligent or raise more money than the Democrats. Republican are winning federal races because their beliefs are better aligned with what the voters’ value in themselves.

This alignment matters more in choosing who we send
to Washington, because Washington is where the action is. The issues and subjects that define us as individuals are debated in Washington — not so much at the state and local levels: Examples are the debates over the boundary lines of free enterprise, fairness, religion, guns, gender issues, abortion and limits on how bad government can get.  

Who thinks like you do? That is the question that turns federal elections. Former Congressman Larry Hopkins, R-Lexington, recognized that fact in winning his first term in 1978. The slogan on his billboards was, “He Thinks Like Us.” And he went on to serve seven terms.

Power of beliefs

Beliefs are extremely important; they are the protector of every society, and as American writer and poet Marianne Moore (1887-1972) put it, “Belief is even stronger than the struggle to survive.” Think of the jihadists but also of American soldiers who have sacrificed their lives for our country. 

Grimes picked wrong strategy

Elections are complicated endeavors, and multiple factors make a winning campaign. However, all of the components put together won’t work successfully in a federal election without the voters’ perception that a candidate’s inner self is aligned with theirs.

The voters in Kentucky don’t sufficiently know what Alison Lundergan Grimes stands for. She has made a name for herself. But her strategy for winning has been wrong. Consequently, though she has raised a lot of money, she hasn’t spent it wisely. Saying you’ll fight for women, that you’re in favor of jobs and raising the minimum wage, while complaining that your opponent has served too long in Washington — that’s not revealing your own inner self; that’s hiding it.

Staking out a position on a few selected legislative issues doesn’t disclose the character and values embedded in a candidate’s inner self. But it’s a nice illusion. — by Lowell Reese

David Williams expected to win judgeship race

(This story ran in Kentucky Roll Call, Oct. 31, 2014) 

Former Senate President David L. Williams was appointed to the bench two years ago by Gov. Steve Beshear, to fill an unexpired term of the late Circuit Judge Eddie Lovelace, of Albany. Williams is running for election to a full eight-year term against retired District Judge Steve Hurt, of Burkesville, Williams’ hometown. In fact, Williams and Hurt were classmates in high school, graduating the same year.

This is a “fairly heated” race and Judge Williams is expected to win. The jurisdiction contains Clinton, Cumberland and Monroe counties. The judicial community in the district (attorneys and court staff), if conventional wisdom is gauging it right, is rallying behind Williams.

Williams, 61, has run for seven different offices throughout his rather short public career — county judge-executive, commonwealth attorney, state House and Senate, US Senate and governor — and this will be his first race to win, other than both chambers of the General Assembly. A source said Williams is strong in Clinton County and “that should clinch it” for him. 

High school classmates aside, this is not a friendly race. Williams is hitting Hurt hard in ads on double-dipping: Hurt retired from the bench to take senior judge status, which enhanced his pension by hundreds of thousands of dollars (the average is about $1 million) by enriching the formula used to calculate judicial pensions.

Williams is making an issue, however, not on the size of Hurt’s pension but on the fact he’s trying to come out of retirement for a government pay check on top of his pension. Hurt is not firing back that Williams will get an enhanced legislative pension based on his pay as a judge. 

Hurt is mad at Williams over a bill in the legislature that died when Williams was president of the Senate. The bill would have extended the Senior Judge Status program, but it died in the House, in effect, sunseting the program — but not before Hurt boarded that gravy train. 

Actually, the House Democratic caucus killed the bill; it wasn’t Williams who did it. But apparently Hurt thinks Williams didn’t try hard enough to save it, and, seemingly, he is holding a grudge against Williams over it. Some local folks are calling this a race for “judge” and a race for “grudge.” 

Yes, there is a place named Cloverlick

The Courier-Journal, in a story online today, reports that, "The campaigns of Alison Lundergan Grimes and Sen. Mitch McConnell are now involved in a social media skirmish about whether or not there really is a place in Harlan County called "Cloverlick," a place mentioned in Grimes's newest ad."
Cloverlick, Ky. is identified in the ad as the hometown of retired coal miner Don Disney, who appears in the ad hitting McConnell on the issue of Medicare. 

Josh Holmes has tweeted that "Reality Check had been unable to find a town named Cloverlick, Ky." Further, a national Republican PAC called America Rising tweeted, "Kentucky Senate Ad Claims Man Is From A Make-Believe Town."

Holmes and America Rising need to back away from that spin posthaste — there is a community in Harlan County called "Cloverlick Junction," which the locals refer to as the "Cloverlick" area. 

See my Kentucky Atlas, a book of place names in Kentucky, at www.kentuckyrollcallbooks.com. 

Below is the comment I posted on the Courier website about today’s story. 

"Joe [Gerth], you mentioned in your story that Cloverlick is not listed in the Kentucky Atlas, my book of place names in KY. The Atlas does contain "Cloverlick Junction" in Harlan County, apparently the home of the Mr. Disney in Grimes' ad. His daughter refers to her Dad’s home place, in her comment posted below, as "the Cloverlick area." Also, you say that neither the KY Atlas or Mr. Rennick's Kentucky Place Names book contain a listing of the "Germantown" neighborhood in Jefferson County, not far from where you grew up. The KY Atlas does not list neighborhoods or creeks; it lists only cities, towns and places with actual names, including wide spots in the road ... 6,500 of them. Members of the media and political campaigns ought to have a copy of the KY Atlas in their library. Check it out: www.kentuckyrollcallbooks.com."

Judge-executive job would spike pension

Two members of the state legislature — Sen. Walter Blevins and Rep. Bob Damron — are on the ballot May 20, running for county judge-executive, Blevins in Rowan County and Damron in Jessamine County. The annual salary of the judge-executive in Rowan County is $86,695, and in Jessamine County it’s $98,255.

Blevins and Damron can use their judge-executive salary, instead of their legislative salary, in the formula to calculate their legislative pension, courtesy of a change in the pension law in 2005 (HB 299) — which Blevins voted for, and Damron voted against. If Blevins is elected judge-executive, and serves at least three years in office, it will more than double his legislative pension from $41,019 a year to $86,695, an estimated lifetime gain of $734,449.

 Blevins’ pension as a legislator, a part-time job, will be 100% of his pay, because he has enough years of service (32 at the end of this year) and a service credit rating of 3.5%. He “maxed out,” reached the 100% threshold, on July 31, 2008, at which time he was automatically enrolled in the state employees’ pension plan (KERS), starting a second legislative pension. Under the 2005 amendment, Blevins can replace his legislative pay with the judge-executive pay in the 3-factor formula used to calculate his legislative pension.

 If Damron is elected judge-executive his legislative pension would increase from $30,735 a year to $59,444, an estimated lifetime gain of $545,197. Damron has one opponent in the Democratic primary, Blevins has five. Former Senate President John “Eck” Rose favors one of Blevins’ opponent in a letter to the Morehead News. 

— Editor's Note: This story was published May 12, 2014 in Kentucky Roll Call. 

Who decides what news is?

I tweeted recently about a Lexington TV station’s airing of a story about a UK fan who tattooed Willie Cauley-Stein’s face on his leg (fulfilling a promise that he would do that if Cauley-Stein committed to play at UK next year, which he did). I said the story had “No news value, promotes primitive behavior.”

On reflection, that a major news outlet would devote substantial airtime – not a snippet – to such triviality and promote the permanent disfigurement of young people is a good segue to larger question: Who decides what’s news? 

A few years ago, I had the honor as then-publisher of The Kentucky Gazette to serve on a three-member panel with the editorial page editors of The Courier-Journal and the Lexington Herald-Leader to discuss the role of the media in making public policy.

The panel was part of a two-day retreat for governmental affairs managers and lobbyists at Lake Cumberland State Park near Jamestown, sponsored by Kentucky Forward, then an affiliate of the Kentucky Chamber of Commerce.

The panel discussed whether the media is the Fourth Branch of government? Should members of the media be required to register as lobbyists? And should the media interfere with the news or simply reflect it?

I expressed my view that the most noble purpose of a newspaper is to report the news, not create it; as it is the most noble purpose of government to advance the standard of living of its citizens, not redistribute their earnings.

Well, that was not the way The Courier-Journal’s liberal editor, David Hawpe, saw the world. He told the audience that his paper was proudly a player in the political process, bent on shaping the direction of the state. Not just reflecting the news, creating it. Hawpe said he believed “the purpose of government is to redistribute the wealth.”

Hawpe is an honorable person, whom I have always respected, because he is sincere and consistent in his principles. As editor, he was not content with telling the news, he wanted to tell it and fix it all at once. His vision was as crooked as a pig’s tail.

He told the audience something even more astonishing, an extension of the media wanting to shape the news. He said (I paraphrase), “Nothing is news until his newspaper (or others in the media) decide it’s news!”

And that takes us back to the UK fan given his “15 minutes of fame” by the TV station for disfiguring himself with a large tattoo of a basketball player on his leg: Someone at the station made a decision on what news is.

Woe, the power of the press! — Lowell Reese

Twenty years after the Republican Revolution

This year marks the 20th anniversary of Newt Gingrich’s “Contract with America,” aka The Republican Revolution, and also the emergence of a competitive two-party system in Kentucky politics.

Between 1994-2014, the evolution of the Republican Party in Kentucky at the state and federal levels has been nothing less than dramatic. In 1994, western Kentucky, the so-called Rock of Gibraltar in political circles because it was the state’s largest enclave of Democrats, fell to Republicans in congressional races, producing U.S. Reps. Ed Whitfield, R-Hopkinsville, and Ron Lewis, R-Cecilia. Those CDs have stayed R, and the Rock of Gibraltar moved to Jefferson County.

Kentucky’s U.S. House delegation flipped in 1994. That year it went from 4-2 Democratic to 4-2 Republican. Today it is 5-1 Republican. The U.S. Senate was 1-1 in 1994, with Democrat Wendell Ford and Republican Mitch McConnell, and now both seats are red.

While the fall of western Kentucky to Republicans in the 1994 federal elections was the most telling that Kentucky might be emerging as a competitive two-party state, the competitiveness was also starting to show up in the state Senate.

Going into the 1994 elections, the Democrats ruled the state Senate 25-13. That year, the Republicans picked up four seats, reducing the Democrats’ margin to 21-17. In the 2000 session, Republicans took control of the Senate for the first time in the state’s history and now dominate the upper chamber 23-14, with one Independent who caucuses with the Republicans. The past twenty years have brought a virtual flip of the Senate, and that has produced a dynamic shift in the political apparatus and power structure in Frankfort.

A similar trend, apparently stemming also from the 1994 period, has been evolving in the state House of Representatives. For the first time in more than 90 years, the Republicans in 2014 have an even chance to capture control of the House. The makeup now is 54-46, advantage Democrats. Going into the 1994 elections, the Democrats ruled the state House 72-28. That year, the Republicans picked up nine seats, reducing the Democrats’ margin to 63-37.

Voter registration is another indicator of the political evolution in Kentucky during the past twenty years. During the twenty-year period, the number of registered Democrats statewide grew from 1,401,893 to 1,667,605, an increase of 19.1 percent; and the number of registered Republicans statewide grew from 635,531 to 1,187,553, an increase of 86.9 percent.  

Said another way, the Democrats’ advantage in voter registration over the Republicans from 1994 to 2014 slipped from 2.2:1 to 1.4:1.

Not ‘Slick Willie,’ it’s ‘Sick Willie’

Note: The following is an editorial I wrote for The Kentucky Gazette. It ran in that paper on Jan. 27, 1998. — Lowell Reese 

Not ‘Slick Willie,’ it’s ‘Sick Willie’ 

It is awful tempting to bash Bill Clinton: because he’s a despicable draft-dodger, a crude and lascivious womanizer, the king of double talk and (after not inhaling and Gennifer Flowers) a confirmed habitual liar. One helluva role model for the children of America. It’s just as tempting to blame the American people for electing a soap-opera president ... albeit under 50 percent both times. 

The fact is, we tend to vote for and then defend those who think like us.

But now is not a time to ridicule this president; the man is sick. How else can you explain why he would subject his wife and daughter to repeated public humiliation; hired help being just the most recent in a string of paramours — followed by a pattern of lies and disrespect for the laws of the land and the family life of the nation. 

The commander-in-chief’s latest romance-novel escapade may lead to proceedings of impeachment. Here we have the president of the United States of America, after a reported affair with White House intern Monica Lewinsky, allegedly encouraging her to lie about their relationship under oath during a deposition involving sexual harassment charges against him by Paula Jones, who claims that Clinton exposed himself in an Arkansas hotel room.

Nonetheless, a majority of the American people — until now at least — have admired Clinton, rationalizing his faults. It’s common to hear that “his personal life is a private matter.” Well, his private life if not the main point. William Jefferson Clinton is the leader of the free world, commander-in-chief of the nation’s Armed Forces (which has had its share of sex scandals recently), and above all: he’s a role model for the youth of America. 

One of the most powerful forces in the whole animal kingdom is emulation. Mankind is no exception. It is said that the nightingale cannot perform unless it first hears a few notes from another nightingale. Bill Clinton sings the nightingale’s song of America, and it’s not pretty. He’s one sick bird. 

The message this president sends, by example, to the children of America is: lying to people can be an alternative way to get through life; deceit and double-talk are manipulative skills to be nurtured; both moral and man-made laws are for timid souls; and Abe Lincoln was a stooge — honesty isn’t the best policy.

Sometimes it takes awhile for vindication to work; it took more than five years for Gennifer Flowers; it may take another year or two for those of us who served in Vietnam. But I still have faith — however tested at times — that deep down the early American values that made this nation great will endure. I’m betting on the iron laws of nature; that truth in the long-term prevails. Always. This nation was founded on truth, not lies; on duty, not draft-dodging; and on honesty; not double-speak. Let the proceedings begin. — Lowell Reese, publisher

Oh! Kentucky Tea Party folks nix outside guru

The following press release came in e-mail this afternoon from Scott Hofstra, spokesman for The United Kentucky Tea Party. — Lowell Reese

Earlier this week, the Huffington Post published an article in which they erroneously quoted Mr. Greg Fettig as a leader of "The Unbridled Liberty Tour" in Kentucky. In order to correct the erroneous information published by the Huffington post, we need to make you aware that The United Kentucky Tea Party owns and operates "The Unbridled Liberty Tour.”

Mr. Fettig was consulted on strategy due to his successful efforts in Indiana.  He is not a leader or organizer of the Unbridled Liberty Tour and he will not be participating in organizing the grassroots efforts in Kentucky.

Please direct all further inquiries to Scott Hofstra, the Spokesman of The United Kentucky Tea Party. #

Pension crisis not "resolved"

The cost of public employee pensions is smothering out essential government services, especially funds for education. Consequently, a substantial tax increase is necessary — and it’s coming.

Attached is a copy of my op-ed on the pension issue, which ran Sunday, Jan. 12, 2014, in The Courier-Journal. 

____________________________________________

Op-ed

Sunday, Jan. 12, 2014
 The Courier-Journal 

Written by Lowell Reese

Special to The Courier-Journal

The pension crisis will only persist

Benefit creep, lack of transparency hurt KY

The six state-operated pension systems for Kentucky’s public employees had unfunded liabilities of $33.7 billion last year. New figures that will be available in the next few weeks are expected to show the red ink is rising. A recent actuarial report reveals that the Kentucky Employees Retirement System has only 23.2 percent of the funds needed to cover its pension liabilities. Red lights flash when the funding level dips below 60 percent. 

The financial straits of KERS, unfortunately, are similar to Illinois’ pension system; they’re the worst in the nation. So, the Kentucky General Assembly’s first priority is to keep KERS afloat, and secondly to pay down the massive debt in all the systems. This is important because pensions are promises made to public servants that must — and will be — paid, and also because funding for education and essential government services is being diverted to pay for pensions.

Between 2008-2014, base state funding for K-12 education is down 1 percent, and the funding for higher education is down 14 percent, while funding for public pensions is up 63.5 percent. As educators beg the General Assembly to restore their funding, the Kentucky Teachers’ Retirement System announced it will ask legislators for an additional $800 million in the next two-year budget, and the pension reform bill (Senate Bill 2) enacted earlier this year calls for about $450 million more during the biennium from the General Fund and other employer funds. 

Pensions are dipping into the budget of the commonwealth as never before. Pensions are crowding out education. They are crowding out infrastructure. They are crowding out programs that affect the lives of all Kentuckians. 

The pension reform bill was promoted as a measure to solve the pension crisis. But it was purposely limited to doing what was politically “feasible.” Which meant, no heavy lifting, and don’t mention expenditures, or what caused the crisis. The primary cause, benefit creep, was off limits because it's the other third rail in politics, and, in part, because it would draw attention to the legislators’ role in creating the crisis. 

The reform goes in effect Jan. 1, 2014. But it affects only new hires and excludes teachers. In time, we shall see how it works. What we do know now, however, is that the contribution rate for state agencies and non-government entities, like Seven Counties Services, will increase from 26.79 percent of payroll to 38.77 percent next year — a spike of 44 percent. The rates are projected to stay slightly above that level (rising to 40.1 percent) for at least the next 20 years. What business in the private sector can survive paying 40 percent of payroll for pensions?

So the reform will make things worse over the next four years, then savings kick in. Actuarially, proponents are quick to say, the reform will save $10 billion over two decades. But there are a couple a major problems: the projections are based on no changes in the actuarial assumptions, and zero benefit improvements for state employees for 20 years — which defies logic. 

Given the nature of politicians and the culture in which they operate in Frankfort, a culture of double and triple government pensions, benefit enhancements are bound to continue. The reform does nothing to prevent benefit creep, nor was it designed to. Each new benefit will reduce the savings, and that is the fallacy of SB 2. 

Of all the public pensions systems in Frankfort, the richest is the legislators’. In 2005, they sneaked through a bill (HB 299) to greatly enhance their pensions in a variety of ways. The most offensive of which, they can now switch salaries in the pension formula and calculate their legislative pensions using their salary in a full-time government job before or after leaving the legislature. As a result, a growing number of former legislators are, or will, draw a legislative pension exceeding $100,000 a year — for doing a part-time job. One former House member has a legislative pension of at least $168,686 a year by using his salary as a vice president of a regional university to calculate his legislative pension. It’s called reciprocity. 

Politicians created the pension crisis and only they can fix it, which, of course, they’re not likely to do without transparency. Kentucky’s pension records are not subject to the open records law. They are shrouded in secrecy.

Lowell Reese is editor and publisher of Kentucky Roll Call, a political newsletter in Frankfort. See www.kentuckyrollcallbooks.com.

Governor spins pension reform as No. 9 accomplishment

Today Gov. Beshear released a list of his Top 10 Accomplishments in 2013. Number 9 on the list was “Secured Pensions, Lean Government.”

Here’s what he said about public employee pensions. He is referring to Senate Bill 2, the pension reform bill enacted in April 2013.

“This spring, Gov. Beshear led weeks of bipartisan negotiation which resulted in the passage of bills to stabilize and modernize the state’s pension system [emphasis is the governor’s]. The legislative package created funding to pay the state’s full (sic) recommended annual pension contribution without threatening key state services like education and public safety. The increased cost to fully fund the actuarially required contribution to the Kentucky Retirement Systems is estimated at $100 million per year from the General Fund.

“The looming pension liability threatened to gut funding for education and all other priorities. It demanded our immediate and bipartisan cooperation,” said Gov. Beshear. “No matter our political philosophies, none of us were willing to put our kids at risk of a stripped-down education.”

Well, I should tickle the governor before I pinch him. He should be congratulated with a great deal of enthusiasm for connecting the dots between public employees pensions and education, and for saying so in such a high-profile release.

Education is the best hope — no, the only hope — for a relatively poor state like Kentucky to become un-poor. And the most immediate threat to that opportunity right is now is the $33.7 billion public employee pension debt, which must be paid, and doing so is crowding out funds for education at a rapid pace.

Since 2008, base funding for K-12 is down 1 percent, funding for higher education is down 14 percent, while the cost of state employee pensions is up 63.5 percent.

Now the pinch: The governor boasts of “the passage of bills” (SB 2 and HB 440) to “stabilize and modernize” the state’s pension systems. SB 2 is the much ballyhooed and oversold pension reform bill. It did not stabilize the pension systems — certainly not in the short term, and probably not in the long term. Actually, SB 2 raises the employer (taxpayer) cost 44 percent in each year of the next two-year budget, and will continue to cost more than the present system through 2018. After that, the Kentucky Retirement Systems’ actuary projects that savings will kick in, and over the next decade save $10 billion.

There are two reasons why the purported $10 billion savings is hyperbole. The 20-year projections producing the savings is based on (a) “0” changes for two decades in the assumptions used in making the projection, such as medical inflation, market yields, size of the government payroll, and a variety of other factors; and (b) the projection is based on “0” benefit improvements for public employees for two decades — both defy logic.

Given the nature of politicians — and the subject of pensions is a public policy issue — and the culture in Frankfort in which they operate, a culture of double and triple dipping government pensions, there may be no savings at all from SB 2 after the next two decades, only rising costs.

There’s going to be a see-saw effect out of this — as medical inflation and other cost-drivers go up, savings go down; as employee benefits go up, savings go down. Every new cost will erode the savings a little bit more until possibly there are no savings.

Also in the governor’s release, he said the “increased cost” to fully fund the ARC payments to KRS is “estimated at $100 million per year from the General Fund. What he conveniently ignored (it’s called spin) is that not all of the increased cost for going to 100 percent of the ARC is paid out of the General Fund. Some agencies pay with fees; aquasi- and non-government entities pay directly and so on. The total increased cost for the biennium is about $450 million in additional revenue. Further, the governor’s $100 million ($200 million for the biennium) from the General Fund is low-balling it.

Besides, where will the $200 million extra that the governor is talking about come from, in an already very tight budget?  Well, lawmakers have three choices: raise taxes, borrow, or rob Peter to pay Paul — which means further crowding out of essential government services, and education is the biggest slice of the budget pie.

In the meantime, the red ink in rising in the public pension systems, and the cost of pensions will continue to devour funds for education —unless education leaders, together with taxpayers, revolt and demand of politicians that they get pension expenditures under control.

The pension crisis is not a revenue problem; it’s an expenditure problem. With apologies to James Carville: “It’s about the expenditures, stupid.”

Judge’s pay gives Stein gold-plated pension

When Gov. Beshear appointed state Sen. Kathy Stein, D-Lexington, to a judgeship in Fayette County in October it tripled her legislative pension by nearly $900,000. The windfall is the result of a little noticed bill when it was enacted in 2005 (HB 299) that allows legislators to switch salaries when calculating their legislative pension.

The three factors in a legislator’s pension formula are (1) salary, (2) years of service and (3) 2.75 percent. Thanks to the 2005 law, which legislative leaders — Republicans and Democrats — sneaked through the legislative process, Stein is able to use her judge’s salary of $124,618 instead of her pay as a legislator, which was $40,668. Stein did not vote on the bill.

Using the higher salary triples her legislative pension, and, based on a Social Security Life Expectancy Table, gives her a lifetime gain of an estimated $888,174 … on top of her regular legislative pension.

Stein is not the only one who left the General Assembly enriched from the 2005 bill. To name a few, former Rep. Harry Moberly, D-Richmond, quit with a legislative pension of at least $168,686 a year; former Rep. J.R. Gray, D-Benton, left with a legislative pension of about $136,500 a year; and when former Rep. James Comer resigned to take the oath as commissioner of agriculture it was a moment that spiked his legislative pension at least $467,369. Moberly, Gray and Comer in 2005 voted in favor of the self-enrichment.

Moberly and Gray also have a second pension in KERS, the pension system for state employees, in which they were enrolled automatically as a legislator once they “maxed out” in the legislators’ pension system, thanks to a 1998 law change that hardly anyone knows about.

So, Moberly’s government pensions for being a legislator is around $180,000 a year — and he almost surely has a third pension from his private-sector employer, Eastern Kentucky University, that puts him well over $200,000 a year from three government pensions.

Gray also has a second pension in KERS, under the 1998 law, putting his two government pensions at around $150,000 a year.

The list of super-rich pension (courtesy of the taxpayers) for a part-time as a legislator is long and growing. Reps. Bob Damron and Sen. Walter Blevins have announced they are running for county judge-executive next year — a move that would more than double their legislative pensions. Look for more legislators to run for judge-executive.

Pension abuse is embedded in the culture, especially in Frankfort. It is common for people in the capitol city to be drawing “two and three” pensions.

Oh, did I fail to say the pension system for state employees is so broke it’s on life-support, and that pension costs are crowding out essential government services?  

Shredded documents taint multi-million dollar state contract

Editor's note: The following story ran Oct. 2, 2013 in Kentucky Roll Call. 

A former governor of our state once told Kentucky Roll Call that a governor should always appoint as secretary of the Finance and Administration Cabinet a person who understands what he wants without having a conversation about it. That way, if trouble arises, the governor can say, “I had no part in that decision.” While that may or may not apply to this story, an appearance of telepathy colors it.

It’s about a state contract for printing services, and the bidding for it by Lexmark and Xerox, and the shredding of evidence by the Finance Cabinet.

There were two RFPs (Requests for Proposal) for this five-year, multi-million dollar contract: In the first go-round, in 2011, the contract was awarded to Xerox. Lexmark filed an administrative appeal (protest), which the Finance secretary ultimately upheld, reversing the award to Xerox, based on a discovery of “error and prejudice” — the scoring was called into question.

Consequently, the Cabinet secretary ordered, on March 20, 2013, that the RFP be rebid.

The second RFP, issued on May 14, 2012, is where we pick it up. The RFP covered “equipment [printers and copy machines], needs analysis, training, implementation and maintenance” for the printing needs for all of state government.

Xerox proposed a cost of $23.3 million, and Lexmark $15.8 million. For Xerox, that comes to $387,793 a month, and for Lexmark, $262,891 a month — a difference of $124,902 every month for five years, and possibly 10 years.

The total difference of $7.5 million over the initial term could eventually reach $15 million or more in the event the renewal options are exercised — for roughly the same product and roughly the same service.

Bidders were evaluated in three categories: (1) technical proposal, (2) cost proposal, and (3) oral presentation. Lexmark outscored Xerox in each of the first two categories by a total of 40 points (3,911 to 3,871).

But on the final and more “subjective” evaluation, the oral part, Xerox scored 480 out of 500 points to Lexmark’s 400, thus edging out Lexmark by 40 points to win the contract.

On Sept. 24, 2012, the Finance Cabinet awarded the contract to Xerox and, the next day, directed the members of the evaluation team to shred their score sheets and other evaluation documentations.

Xerox is a client of the Louisville-based law firm Stites & Harbison. Before becoming governor, Steve Beshear was a partner at the firm, and his son, Andrew, is now an attorney there.

Lexmark filed an administrative appeal on Oct. 13, 2012. That process would take four months, until Jan. 18, 2013, when the Finance secretary denied it, clearing the path for the Cabinet to proceed — to give the contract to Xerox.

Lexmark sued the commonwealth, the Finance secretary and Xerox in Franklin Circuit Court on Feb. 12, 2013 (Civil Action No. 13-CI-00158), claiming that the secretary’s decision giving the contract to Xerox was “unlawful, arbitrary, capricious and unsupported by the record.”

Where the story began

In early 2010, Gov. Beshear launched a program called Smart Government Initiative, an innovative effort in which employees would examine the efficiency of state government and then recommend ways to trim costs. The goal of SGI was “to save taxpayers dollars,” the governor reasoned.

The employees did their part; they identified ways to save $7.2 million in the first year alone. But Lexmark contends paying Xerox $7.5 million more than what it proffered canceled out the SGI savings.

Destruction of documents

Beyond the savings question, however, there is a larger issue: the destruction of documents.

On Sept. 25, 2012, Brenda Brown, an employee in the Commonwealth Office of Technology, an agency of the Finance Cabinet, sent an e-mail to the members of the evaluation team, which read, in part:

“The MPS contract has been awarded to Xerox. I have checked with Stephanie Williams, OPS, and Terry Stephens, Executive Director — OIS, you may now shed your evaluation documentation, including any response CDs, paper copies, scorecards and/or other notes. Don’t forget to delete electronic copies/emails, etc.”

One day after Brown’s e-mail, Lexmark, on Sept. 26, served its first open records request, asking for “any and all correspondence, emails, memoranda and other communications that refer to or relate in any way” to the RFP and the evaluation and scoring of the bidders.

By law, government agencies are required to respond to open records requests within three business days, and then may take an additional reasonable time to gather the information. In this case, the Brown e-mail would not be made known to Lexmark until three months later on Dec. 26.

Though the Cabinet provided an initial response to Lexmark’s open records request, dated Oct. 18, 2012, which included 12 pages of e-mails, it was not until three months later, after repeated inquiries by Lexmark seeking additional information that the Cabinet chose to reveal the existence of the Brown e-mail.

While the shredded score sheets and other evaluation documentation may have shown how Xerox came from behind down the stretch to win the evaluators’ hearts, and, therefore the contract, even though it was significantly higher than Lexmark’s, the Cabinet, by failing to preserve the full record of this multi-million procurement, prevented the Court, Lexmark and the public from knowing the full truth about the contract.

Cabinet defends the shredding

The Cabinet, in its filings with the Court vigorously defended its order to destroy the documents. And Donald Speer, an executive director in the Finance Cabinet, defended the records’ destruction in a story that ran in The

Kentucky Gazette earlier this year. Speer said, in effect, that the information from the individual scorers’ sheet, though not the actual score sheets, was used in the final consensus score, and, therefore, met the legal requirements for records preservation. Speer said the scorers were told they could get rid of the hefty documents that were taking up a lot of physical space on their desks and in their offices.

The judge was clearly ticked at the Cabinet

Circuit Judge Thomas D. Wingate ruled on Lexmark’s case on Aug. 22, 2013, and Lexmark lost the contract, but not its destruction of documents claim — the judge kept that part alive.

In his ruling, Wingate cited an Attorney General opinion, which in turn referenced a court opinion, contrary to the Cabinet’s view on preserving documents.

In 04-ORD-187, the Attorney General held that “[w]here the preliminary investigative report or records are adopted as the basis of the final action taken… [the] records forfeit their preliminary characterization and must be disclosed.” Preliminary notes lose their exempt status when “adopted or incorporated into agency action,” according to the AG opinion.

Further, Wingate cited a previous court opinion, West v. Goodyear Tire & Rubber Co., that said, in essence, when a party destroys evidence that could be significant “in pending or reasonably foreseeable litigation,” the jury is instructed that if it believes the missing evidence was destroyed “intentionally or in bad faith,” it may infer that the missing evidence would hurt those who destroyed it.

Such an instruction to a jury is generally appropriate only when three elements are satisfied: (1) the destroying party was “obligated” to preserve the evidence; (2) “the destruction involved greater culpability than mere negligence; and (3) the missing evidence was relevant to the action. Wingate held that Lexmark “presented sufficient evidence on all of these elements.”

And, according to administrative regulation 200 KAR 5:307, pertaining to the retention of records dealing with state procurements bids, “All evaluation documentation, scoring and summary conclusions shall be in writing, and made a part of the file records. …” Moreover, pursuant to the general records retention schedule for state agencies contained in 725 KAR 1:061, the Finance Cabinet was required to retain the “Bid Score Sheet File” for eight years.

The quicksand that the Cabinet stepped into, by destroying the documents, got deeper as the story unfolded. In his ruling, Wingate held that other retention schedules, and case law, require “the Finance Cabinet to retain any record required for current or pending legal action, or where the evidence may be required in a court case.”

He held that given the history of the Lexmark-Xerox battle for the contract, “it was reasonably foreseeable on the day following Xerox’s contract award that Lexmark would file a protest, as they had done after the first RFP. Litigation was expected.”

Therefore, in addition to the judge’s holding that the Cabinet violated the open records law and destroyed evidence “with a degree of culpability greater than mere negligence,” Wingate pointed out that the Cabinet should have expected that the missing documents would be required as evidence in court.

The ruling

In his support for allowing Xerox’s contract award to stand, Wingate cited the statutory authority of a Finance secretary to make contract decisions as provided in the Kentucky Model Procurement Code. He found no fault in

Finance following the procurement laws, except for the destruction of documents part, which he viewed as a serious but separate matter — it’s an Open Records issue, not a procurement code issue, he held.

The judge clearly rejected the Cabinet’s defense on the missing score sheets and other evaluation documentation to the degree that he SEVERED Lexmark’s claim about the destruction of documents, in effect, setting it aside to become a separate action, should Lexmark choose to pursue it.

That leaves Lexmark the options of appealing Wingate’s decision and also proceeding with a separate claim on the destruction of documents at the same time.

Wingate faulted Lexmark as part of his explanation for upholding the contract award to Xerox. He said Lexmark failed to exhaust its administrative appeal by not raising the destruction-of-documents issue in its protest with the Cabinet before filing the lawsuit.

Had Lexmark followed the judge’s logic and included the issue in its administrative protest, the Cabinet would have almost surely held that destroying the documents was not improper, and that would have established a situation entitling the Cabinet to great deference by the Court under Kentucky law, which provides that in procurement decisions, the Finance secretary “shall be entitled to a presumption of correctness.” (KRS 45A.280). So, it was a “Catch 22” for Lexmark.

Related to the whole process, including the administrative appeal process, the judge in his ruling seemed to be saying that he would not be first in reviewing the “destroying documents” issue — the Cabinet had to have the opportunity to review it first.

Lexmark had not made a decision as of our press time as to what its next steps will be.

Lexmark’s only remedy in terms of the Cabinet’s destruction of documents is through the Open Records Act, making it hardly worth the effort. At best, it might recoup part of its attorney fees. And appealing Wingate’s ruling to the Court of Appeals and state Supreme Court is uphill. The same as Wingate was required by law to grant the Cabinet secretary the “presumption of correction,” so it is with the different levels of the courts.

Outlook: We’ve probably heard the last of all of this, unless the attorney general, state auditor or the legislature develops an interest. #