Press

Findings from TUA’s pension project on Covington, Kentucky, are featured in this article at Cincinnati.com.
COVINGTON— Dozens of Northern Kentucky public employees will be “pension millionaires” once they retire, according to estimates released by a national anti-tax group.
The Chicago-based Taxpayers United of America looked at employees of Boone County, Kenton County, the counties’ school districts and Florence. The group’s vice president, Christina Tobin, used a press conference on Tuesday at the Courtyard by Marriott to accuse Covington officials of refusing to provide salary information for their current employees.
Covington City Solicitor Frank Warnock said he provided the group a list of city positions and the salaries for those jobs. He said the city didn’t put names to its more than 300 positions. Warnock said to create such a list would be time-consuming and not necessarily required under state open records law.
He called the group’s press conference “manufactured drama.”
“This is like hitting somebody below the belt,” Warnock said of the group’s criticism of the city.
He said the group employs “low rent” ways to draw attention to its cause instead of trying to work with government officials to solve problems.
Tobin admitted county and municipal governments do not make the rules that determine pension benefits but that her group wanted to bring attention to million-dollar pensions to a local level. She said people hear about huge unfunded pension liabilities but it is hard for them to comprehend until they see the size of the pension for their child’s fourth-grade teacher, elementary school principal or police officer.
The group is lobbying for an end to guaranteed lifetime pensions for government employees. Instead, Tobin said all new public workers should be enrolled in private savings plans, like a 401(k), and they should work until later in life, as private sector employees do.
Taxpayers don’t even know for certain who gets what because Kentucky law requires that public pension records be kept confidential. To get the estimates it released, the group used publicly available government salaries and applied the formulas of several public pension funds. It ended up with educated guesses that could be skewed by assumptions, such as how long someone works in a government job.
Government pensions have been controversial in Kentucky in recent years. The state’s public pension funds face a collective unfunded liability of close to $30 billion, among the nation’s worst. The state and local governments expect to plow hundreds of millions of additional dollars into those pension funds in coming years.
In response to the group’s press conference, Gov. Steve Beshear released a statement highlighting changes to the pension system for new employees designed toward getting the systems to full funding.
“We are confident that by following those guidelines, the pension system will remain stable,” Beshear said.
Tobin said Kentucky residents will not know if “their house is in order” until the state makes pension records open for public inspection.
According to the group’s estimates, the highest annual pension in Boone County government is $85,816 and 24 other employees will all get more than $43,000 per year. In Kenton County government, the the top 25 pension earners range from $33,000 to $74,000.
Fifty teachers in Boone and Kenton counties will each get more than $50,000, according to the group.
In Florence, 25 employees will get annual pensions of more than $47,000, according to the group, and that the city’s top pension earner will get nearly $66,000 annually.
By contrast, residents in Boone and Kenton counties have an average wage of $40,000 and $43,000, respectively, and outside of government jobs, few people can expect to get pensions, the group claims.
“Boone and Kenton county government pension systems are making millionaires out of public employees at taxpayer expense,” Tobin said. “Although some reforms have been made to the Kentucky government employee pension systems, additional reform is critical.”

Taxpayers United of America, an anti-tax group advocating switching retirement accounts to defined-contribution systems, has asked Gov. Steve Beshear to release information on employees’ public pensions.
The Chicago-based group released its own study into pensions here, using current top salaries among state employees, university officials and teachers as well as Frankfort and Franklin County employees to calculate estimated retirement benefits.
Those earning six-figure salaries included doctors, surgeons, psychiatrists, attorneys, cabinet officials, political appointees, administrative law judges and other high-ranking positions.
The study assumed each employee would work 30 years, retire at age 52, live 23 to 32 years based on average life expectancy and earn a 2 percent cost of living adjustment each year. It also assumed that the given salary would be the average.
The report doesn’t include current retirees, certain judges, legislators or so-called “double dippers.”
Taxpayers United, which has been to Illinois, Wisconsin, Indiana, Michigan and Missouri to drum up support for 401(k)-style government retirement plans for future public employees, assumed much in its study because individual pension information is exempt from the state’s open records law.
Christina Tobin, vice president of Taxpayers United, delivered a letter to Beshear’s office, calling Kentucky one of the least cooperative states in releasing individual pension numbers.
“You (Beshear) said it will take political courage and the will to lay the foundation for a better tomorrow,” Tobin said during a press conference in reference to Beshear’s inaugural address.
“A great step toward that better tomorrow would be to release Kentucky’s pension information so that your citizens see clearly the need for immediate reform.”
Tobin said teachers and rank-and-file workers aren’t to blame for woes facing the pension system, but rather administrators with lucrative salaries who are “in bed with the union leaders, who in turn fund the wrong Democrats and Republicans for office.”
She also said current employees need to pay more into the pension system and retirees should collect Social Security, similar to workers in the private sector.
Beshear spokeswoman Kerri Richardson said reforms passed in 2008 should stabilize the pension system.
“We made significant changes to the pension system for new employees in 2008 that established a path toward getting the state’s pension systems to full funding, and corrected a number of administrative concerns that over time had weakened the health of the entire system,” Richardson said in an email.
“We are confident that by following those guidelines, the pension system will remain stable.”
The Kentucky employees and teachers retirement systems currently face a combined unfunded liability of more than $30 billion in its pension and health benefit plans, and in 2008 the legislature passed reforms to gradually increase state funding and decrease some benefits to put the systems back on solid financial footing by 2025.
Those reforms aren’t enough, said Rae Ann McNeilly, director of outreach with Taxpayers United and director of communications with the Illinois Libertarian Party.
Taxpayers United is a nonpartisan group, said Tobin, who ran for California’s secretary of state as a Libertarian in 2010. She also heads Free and Equal Inc. and the Free & Equal Elections Foundation, advocating for election reforms.
Bill Thielen, interim executive director of the Kentucky Retirement Systems, said the decision to switch to a 401(k)-style pension rests with the General Assembly, but an actuarial analysis of legislation last year showed such a change would cost the state about $7 billion over 15 years.
Costs would gradually decrease after 15 years, he said of the 25-year study.
“Whether or not they go there ultimately is a decision of the General Assembly, but they have to realize if they can’t pay the cost now, they’re going to add significant additional costs,” Thielen said of changing to a defined-contribution system.
Not everyone heralded Taxpayers United’s message.
Morehead State University history professor John Hennen, at the Capitol to protest mountaintop removal, repeatedly interjected and questioned Tobin and McNeilly on Taxpayers United’s interest in public pensions and its corporate donors.
The confrontation reached its climax when Tobin requested a Capitol security guard in the Rotunda.
Afterward, Hennen acknowledged that he tends to get “a little too excitable” and said he supports any effort to flush out abuses in the state pension system.
But he said Taxpayers United’s study focused on the high-salaried employees, not the average state worker. The corporate sector has successfully demonized public pensions and, in some cases, undermined collective bargaining, he said.
“The way they’re trying to drive a wedge between public workers and private workers is by now going to private sector employees and saying, ‘Look at these people who are robbing you, the taxpayer,’” Hennen said.
“… They picked high-dollar people who may be overpaid, depending on where they are, and their pensions may be too lucrative, but by doing that, they’re casting suspicion on all public employees, including those who take low pay work so that they can get the defined benefits.”
Statewide, 39,732 retirees and beneficiaries in the state’s non-hazardous retirement fund received an average of about $20,400 in pension payments for fiscal year 2010, according to KRS’ latest comprehensive annual financial report.
More than 44,000 retired teachers and beneficiaries got more than $29,800 yearly on average in the same fiscal year, the Kentucky Teachers’ Retirement System’s report says.
Retired teachers, unlike some state retirees, don’t receive Social Security, said Beau Barnes, deputy executive secretary of operations and general counsel for KTRS.
In Franklin County, 6,025 retirees or beneficiaries got more than $30,200 on average in fiscal year 2011, according to KRS numbers.
A move to a 401(k)-style system for future state workers likely faces an uphill battle in the upcoming legislative session. A bill calling for such a change passed the state Senate but failed to clear the House’s State Government Committee during the 2011 session.