Let’s talk about the Kentucky Retirement Systems (KRS) using tax payer money to pay for the pension plans of lobbyists. There are dozens of plans in County Employee Retirement System (CERS) part of KRS that would qualify as lobbyists. CERS governance actually favors the influence of lobbyists over government employees.
In 1997-2001 CERS members elected two too qualified board members, Jane Driskell and George Beulein, both worked as financial professionals in Jefferson County. They starting asking too many tough questions and KRS prevented them from running for a 2nd term by coming up with an obscure ruling that excluded them by saying since they were supervisors. As we have seen before KRS has the ability to manipulate term limits.
Since most CPA level type financial professionals in county and city governments supervise people knowledgeable competent oversight was prevented. Instead they were replaced with people who were not qualified, but were lobbyists. The two current CERS elected members are both lobbyists (Vince Lang and Robert Wilcher), since the most qualified CERS members have been barred from running. Also with we have a trustee who runs KY County Judge Association, and I bet he has a good deal also.
CERS has been a way for politicians to return political favors. The way the system works is for the lobbyist to channel money from either a political action committee or individually to a candidate or caucus. In return the lobbyist organization becomes the beneficiary of some pretty nice retirement benefits. This gives a whole new meaning to the term deferred compensation.
Remember Adam Tosh, the KRS’s now departed Chief Investment Officer, who was unemployable after his firm MDL went under his and former boss went to prison for defrauding an Ohio public plan with a bad hedge fund.
I’m sure that Tosh’s hiring by KRS was totally merit based and that his former father-in-law, a Pennsylvania political operative, Virgil Puskaterich who was on the board of Council of State Governments and a good buddy of Rep. Jody Richards (then Speaker of the House) had nothing to do with the hiring. Richards also employed the wife of former KRS Executive Director Bill Hanes.
Tosh is not the only questionable personnel decision at KRS. There is Bill Thielen a retirement recipient from the Kentucky League of Cities, part of KRS that is not a government entity, is now the chief operations officer at the Kentucky Retirement System. When he worked at the League he oversaw this sweetheart deal.
From the Louisville Examiner:
KLC staff also benefited from a retirement bonus in the form of a forgivable loan as an incentive to “remain with KLC and to reward past loyalty and dedication.” A board committee set aside $400,000 for this bonus – the principal amount of which was to be forgiven over a five-year period. Seven employees were paid an amount equal to the purchase of five years of nonqualified service from the County Employee Retirement System (CERS).
While KLC has indicated that the executive director received $125,000 over five years as part of this bonus compensation program, this fact disclosure by itself is misleading, according to the exam.
Executive director Sylvia Lovely’s $25,000 payments were after-tax amounts, meaning over the five-year period, the bonus was provided in annual amounts ranging from $43,000 to $45,500. The exam found that KLC’s actual total cash outlay for the five years of payments was $218,000 for Ms. Lovely. To date, the total cost of the bonus compensation program is in excess of $533,000.
Based on calculations by the Kentucky Retirement Systems, the exam estimates the pension benefit for participating KLC staff. According to the exam, the projected monthly pension benefit for Ms. Lovely at age 65 would be $17,725, with the projected lifetime incremental benefit of the retirement bonus at $502,384. If she retires January 2010, the monthly pension benefit will be $13,769.
At age 65, the deputy executive director’s monthly pension benefit would be $16,357, with the projected lifetime incremental benefit of the bonus being $508,267. Auditors found that the chief insurance services officer received $58,000 under this program, even though he was ineligible to purchase nonqualified service time in CERS.
A list of all of the agencies participating in CERS pretty provides an organization that covers every political operative in the Commonwealth of Kentucky. Here’s the list, at least until they realize its public and delete it.
There is a solution. Kick them out of the system. New Jersey is kicking out their equivalent of KLC and KACO out of their pension plan. Headlines revolve around calling these group members lobbyists