Golden Parachutes for State Lawmakers?

November 13, 2012

Investigative Reports

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Golden ParachutesEditor’s Note: The Nerve this week is republishing some of its biggest scoops over its nearly three years of operation.The story below was first published on Aug. 17, 2010.

In South Carolina, retired legislators earn an annual average of $19,605 in gross retirement benefits, based on July figures from the state retirement system.

That’s slightly higher than the average pension benefit for retired teachers and police officers. But lawmakers typically don’t work as many hours as most teachers and police officers.

How does this happen? It’s relatively easy when you write the laws for the state retirement system. And the 170 members of the General Assembly have written cushy provisions for themselves over the years.

The General Assembly’s current longest-serving member, Sen. John Land, D-Clarendon, who has been a senator since 1977, told The Nerve last week that he supports pensions for state lawmakers.

“I think a retirement system for legislators is just as appropriate as a retirement system for state employees, because that’s what I am,” the Senate minority leader said, noting he is a member of the S.C. State Employees Association. “I’ve always been their champion, so to speak, for better pay, better benefits.”

If Land, who has served 35 years in the General Assembly, including a term in the House before joining the Senate, retired this year, he would be eligible for more than $41,000 annually in gross retirement benefits, according to The Nerve’s calculation of the retirement formula for lawmakers.

As of July, a monthly gross total of about $538,000 was paid to 268 retired lawmakers and 80 beneficiaries, according to retirement system records. That works out to about $6.5 million annually.

From the inception of the legislative retirement system in 1966 through fiscal year 2009, a total of about $89 million was paid to retired lawmakers and their beneficiaries, records show.

The entire retirement system has four other separate plans for retired teachers and general state employees, police officers and firefighters, judges and solicitors, and S.C. National Guard members. As of July, the system paid a monthly gross total of about $197.6 million to nearly 130,000 retirees and beneficiaries, including lawmakers, records show.

Nine states – Alabama, California, Louisiana, Nebraska, New Hampshire, Rhode Island, South Dakota, Vermont and Wyoming – no longer provide pensions to state legislators, according to the National Conference of State Legislatures in Washington, D.C.

“It’s a gradual drift,” Ron Snell, director of state services in NCSL’s Denver office, told The Nerve last week. “No state that has lacked a legislative retirement system has created one, and a few have moved away from it.”

Snell described South Carolina’s pension for state lawmakers as “unusual,” noting, “It’s just a very complicated way of figuring compensation.”

Of the remaining states, 22 offer optional retirement benefits to lawmakers, while 19, including South Carolina, make it mandatory, NCSL records show. Seventeen states, including the Palmetto State, offer pension plans specifically for legislators.

In Rhode Island, voters in 1994 changed the state constitution prohibiting retirement benefits for state lawmakers after public outcry over fat pensions.

“For decades, there was abuse of legislative pensions,” John Marion, executive director of the Rhode Island chapter of Common Cause, a nonprofit government watchdog group, told The Nerve last week. “They were receiving a pension that was befitting of a professional government employee.”

A special Rhode Island commission that recommended in 1993 eliminating pensions for legislators said in a report that because state employees working less than 20 hours per week were ineligible to participate in the state retirement system, “it seemed inappropriate to mandate or permit legislators to participate.”

“In addition,” the report continued, “pensions are generally viewed as an incentive to remain on the job. That kind of economic incentive appears inconsistent with the concept of a citizens’ legislature.”

Like the S.C. Legislature, the 113-member Rhode Island General Assembly session runs from January into June. In the Palmetto State, lawmakers typically meet for full days on Tuesdays through Thursdays; Marion said legislators in his state usually meet in evenings three days a week.

The NCSL has classified state legislatures into three color groups: red, those that require 80 percent or more of a full-time job doing legislative work; white, those that require at least two-thirds of a full-time job; and blue, those that require half of a full-time job.

South Carolina is among 23 states classified in the white group; Rhode Island is one level below in the “blue light” group.

Land dismisses the notion that the S.C. Legislature is a part-time body.

“I would say that my time spent in Columbia is probably a third or 40 percent of my time,” he said. “The balance of what I do is constituent service back home.”

South Carolina lawmakers over the years have hiked both their salaries and pension benefits, retirement system records reviewed by The Nerve show.

Legislative salaries in 1953, for example, were $1,000 annually. Their annual pay rose to $1,800 in 1961, $2,400 in 1965, $4,000 in 1967, $7,000 in 1974, $10,000 in 1979 and $10,400 in 1991, where it has remained.

But starting in 1983, lawmakers begin giving themselves in-district expense payments that started at $2,000 and skyrocketed to $12,000 in 1995. That was done, despite the fact, as The Nerve pointed out earlier, that under state law, counties are supposed to fund state legislative delegations and can lose state dollars for not doing so.

John Crangle, executive director of Common Cause of South Carolina, earlier told The Nerve that most lawmakers typically pocket their in-district expense payments.

Those payments don’t include $131 daily “subsistence” payments for hotels and meals while on legislative business, $35 for attending a meeting on a non-legislative day, and 50-cents-per-mile reimbursement for trips from their home districts.

Legislative pensions also have gotten more generous over the years, according to retirement system records. When the lawmakers’ plan was enacted in 1966, the retirement formula was $5 times the number of creditable years; in 1972, it changed to $15 times the number of creditable years.

In 1976, the formula changed to 4.5 percent of “earnable compensation” times years of credited service. The rate increased to 4.82 percent in 1989, where it has remained.

And what exactly is “earnable compensation”? It’s the legislators’ yearly $10,400 salary plus their annual $12,000 in-district expense payments, for a total of $22,400.

As of July, retired lawmakers averaged $1,633 in monthly gross retirement benefits, compared to $1,622 for police officers and firefighters, and $1,609 for retired teachers and general state employees, retirement system records show. Only retired judges and solicitors earned more, making an average of $8,113 per month.

Snell, of the NCSL, told The Nerve that he is not aware of any other state that calculates its legislative pensions that way. A number of states factor their legislative pensions based on a percentage rate, years of service and final average salary or the highest average salary over a certain number of years, according to NCSL records.

South Carolina legislators are required to contribute 10 percent of their “earnable compensation” toward their retirement, which Land noted was twice the rate of certain general state employees. But lawmakers can receive refunds of their contributions if they leave the Legislature and don’t participate in the retirement system.

South Carolina lawmakers over the years have made it easier for themselves to receive pensions. According to the state retirement system, legislators are eligible for pensions if they are:

  • Age 60 after retiring and have eight years of service;
  • An active lawmaker and upon reaching 60, retire immediately without eight years of service;
  • Retired after serving 30 years. Active lawmakers who are 70 or have 30 years of service can begin receiving a retirement annuity while still in office;
  • A police officer or general state employee who has reached 62, are no longer serving in the General Assembly, and are eligible for a legislative pension; or
  • A solicitor or judge who has reached 62, and are “otherwise eligible to receive a (legislative) retirement annuity

State law also allows legislators and other participants in the retirement system to buy additional years of credit in the system for any paid “public” or “educational” service, or military service.

The Nerve last week asked the state retirement system for the number of retired lawmakers who have purchased credits, but was informed in writing through a spokesman that it could not be done immediately because it would “require intensive manual research.”