State Politics

State pensions: Critics say lawmakers shouldn’t get boost from executive branch jobs

A recent string of “pension spiking” cases by former Idaho legislators has captured headlines, leading critics to accuse those involved of feathering their beds with taxpayer funds.

But what’s really at stake?

The potential impact to taxpayers appears to be minuscule, if it exists at all. But some who have worked for years to end pension spiking argue that the system creates incentives for corruption.

“It just smells wrong,” said former Blackfoot Rep. Dennis Lake, who long has opposed the practice.

Others, however, say the system works, and moving to change it would deprive the state of talented employees.

“I think we have a good policy right now in Idaho,” said Senate Majority Leader Bart Davis, R-Idaho Falls.

Pension spiking is a result of the way the Public Employee Retirement System of Idaho, known as PERSI, calculates retirement benefits. Two factors are considered: years in service and the salary an employee received during the highest-paying three-and-a-half-year period of employment.

Former legislators have most often come under fire when they are appointed to state agency positions that pay salaries many times greater than the pay rate in the House or Senate. If they stay in the appointed posts long enough, their state retirement benefits will balloon.

The practice also has been criticized because the rules are different for lawmakers than other state employees. According to state law, anyone expected to be at work less than 20 hours a week won’t get all 12 months of the year credited to their years of service. But state law specifically exempts legislators, who work full time at the Capitol during a three- or four-month period each spring, and intermittently the rest of the year.

Last month, Gov. Butch Otter announced that he would appoint Sen. Dean Cameron, R-Rupert, to head the Idaho Department of Insurance.

Cameron has served in the Legislature since 1991, which translates into some 24 years of service under PERSI. If Cameron serves four years in his new post, at a salary of about $100,000 per year, his annual pension would spike from about $8,000 to some $56,000.

Cameron’s potential spike is so high because of his length of service as a legislator, an elected position that pays very little, coupled with the high salary of his new position. But he isn’t the only legislator to benefit in recent months.

Former Sen. Elliot Werk, D-Boise, took a job on the Tax Commission this year. Since he spent 12 years at the Legislature, that means his pension could spike from about $4,000 a year to about $27,000, if he stays on the job for three-and-a-half years.

And when Secretary of State Lawerence Denney won election, it meant that his pension would spike, too. Denney spent 18 years at the Legislature, including four as speaker of the House, which carries slightly higher pay. If he serves his full four-year term, Denney’s pension would jump from about $7,000 a year to about $45,000.

It was cases such as those, Lake said, that motivated him to lead a charge against pension spiking in 2011 and 2012.

“It’s something I felt was not right for my whole time in the Legislature,” he said.

But Davis argued that the issue has been misconstrued.

Legislators, especially those with many years of service, develop skills that can be invaluable when asked to lead a state agency. They know how to present a budget, Davis said, and how to navigate the political environment at the Capitol. Ex-legislators are ready to hit the ground running, he said, while others face a steeper learning curve.

Such appointments usually come when legislators are in their late 40s to early 60s, Davis said, a time when they would be contributing the most to their private sector retirement plans. So, to motivate them to give up a career and serve the state, Davis said, they need to be compensated. Legislators won’t leave private sector jobs and short-change their retirement packages there if they can’t count on a good retirement from the state, he said.

“You dry up that pool of people best able to advocate for a university or for public education,” Davis said. “I don’t think that’s the right thing to do as a state.”

There have been several efforts to end pension spiking by legislators.

Lake sponsored bills in 2011 and 2012 that would have put legislator retirement on two tracks. When a lawmaker left for a state agency, he or she would start a new PERSI account from scratch. That way there would be compensation for time but not a dramatic spike.

A similar bill was proposed during the 2015 legislative session. It made it further than any bill Lake had proposed, passing the Idaho House in a 38-32 vote. But it never got a hearing in the Senate.

The ultraconservative Idaho Freedom Foundation has repeatedly accused Senate President Pro Tem Brent Hill, R-Rexburg, of killing the bill, a charge he flatly denied.

Hill said he sent the bill to the State Affairs Committee expecting it to move forward, but chairman Sen. Curt McKenzie, R-Boise, did not bring it up for a hearing.

“Contrary to what the Freedom Foundation has reported — they never asked me — I didn’t talk Sen. McKenzie one way or the other. I assumed he would give it a hearing, but that’s his prerogative,” Hill said.

In fact, Hill said, he’s not opposed to the bill. He hasn’t made up his mind yet.

“If it came up for a vote, I’m not sure how I would vote on it,” he said. “I would have to listen to the debate on both sides of the issue.”