Sunday, March 04, 2007
Ind. Gov't. - Senate passes a non-transparent and convoluted pay raise bill
A few years back the General Assembly enacted a non-transparent and convoluted series of bills that gave members, their families and spouses heavily-subsidized health insurance for life; provided that the state would contribute to legislative pensions at the rate of $4 from the state for every $1 from the legislator; and insured that legislative pension information was not publicly accessible, and that the recipients and costs of the health-care plan was also inaccessible. (See this ILB entry from 1/6/06.)
A number of those legislators involved are no longer in the General Assembly, they have retired (some in their 40s) and are now reaping the benefits. Others were defeated (and are now reaping the benefits), some precisely because the voters, once they finally learned the extent of the benefits, were not happy.
The health insurance plan was disavowed by the House leadership last session and by the leadership of both Houses at the beginning of this session. There was assurance that the law authorizing it would be repealed, so that it would not spring up again at some later date. There was talk of changing the pension plan so that it was a 1:1 match, like that of state employees.
SB 401, passed by the Senate last week, shows that the promised changes may be made, but that significant tradeoffs have been added to the picture.
Take a look at the first section of SB 401:
SECTION 1. IC 2-3-1-1 IS AMENDED TO READ AS FOLLOWS:Q - Why 2009? A - Because the Constitution prohibits a General Assembly from raising its salary during the term for which it was elected.
[EFFECTIVE JULY 1, 2007]: Sec. 1. (a) The annual salary of the
members of the general assembly shall be the following:
(1) Before 2009, eleven thousand six hundred dollars ($11,600).
(2) In 2009 and thereafter, an amount equal to eighteen
percent (18%) of the annual salary of a judge under
IC 33-38-5-6, as adjusted under IC 33-38-5-8.1.
(b) One-half (1/2) the annual salary shall be paid on the fifteenth
day of January, and one-half (1/2) the annual salary shall be paid on the
fifteenth day of February.
Q - Why pay the entire year's salary in the first two months? A- So that a legislator who resigns on Feb. 16th can keep the entire year's salary.
Q - Why not simply raise the salary from $11,600 to what works out to about $21,700 starting in 2009? A - The cynical answer is because that would be too transparent. The actual answer is that tieing it to the trial judges' salaries, which in themselves are now tied by a law passed in 2005 (IC 33-38-5-8.1) to state employees' salaries, means the General Assembly would never have to vote on its own pay raise again, and that in a few years it would take an accountant with knowledge of state government to read this section and calculate what the salaries of legislators were at that time.
Take a look at the new IC 2-3.5-5-5.5 added by SECTION 3, dealing with legislative retirement benefits, and particularly at the new subsection (b):
(b) This subsection applies after December 31, 2008.Q - What does this mean? A - It seems to mean that the new 2009 "salary" of about $21,700 is not the "salary" for the purposes of legislative PERF. The definition in IC 2-3.5-2-10, itself applicable only to legislators, is expanded here to include the per diem allowance and leadership allowances.
Notwithstanding IC 2-3.5-2-10, as used in this section, "salary"
means the total of the following amounts paid to a participant by
the state for performing legislative services in the year in which the
amounts are paid, determined without regard to any salary
reduction agreement established under Section 125 or Section 457
of the Internal Revenue Code:
(2) Business per diem allowance and allowances paid in lieu of
the submission of claims for reimbursement (but excluding
any allowances paid for mileage).
(3) Allowances paid to officers of the house of representatives
and the senate.
Q - Why is this important? A - because the new subsection (c) provides that:
The state shall make a contribution to the defined contribution fund on behalf of each participant on June 30 of each year. The amount of the contribution is determined by multiplying the participant's salary for that year by a percentage determined for that year by the PERF board under subsection (d).Subsection (d) seems to provide that in 2009 and beyond the state's PERF and pension contribution to legislators will be the same as that of state employees.
SECTION 4 amends an existing open-ended, continuing appropriation, found at IC 2-3.5-5-8 to adapt it to the new provisions.
Q - What does that mean? A - Most items in the budget are specific amounts. You can read the budget bill and see how much is being appropriated to cover the personnel costs of an agency. You can get the budget breakdown and see the details. But not so for the legislative pension plan. The language says, in essence, there is hereby appropriated for each biennium whatever is necessary (and the amount doesn't appear in the budget bill).
SECTION 10 provides for raises for the governor, beginning in 2009, tied to state employee salaries.
SECTION 12 amends IC 5-10-8-8, which deals with group health insurance for public employees, including the controversial subsections (f) and (j) concerning health care for legislators. Rather than repealing IC 5-10-8-8.4, which provides that the legislative health care benefit may not be revoked except by the law passed by the General Assembly:
IC 5-10-8-8.4. Revocation or alteration by employerSB 401 adds a new provision to the end of section 8:
Sec. 8.4. Except as provided by an enactment of the general assembly, an election by an employer under:
(1) section 8(f) of this chapter concerning the payment of a retired employee's premium; or
(2) section 8(j) of this chapter concerning Medicare coverage and program eligibility;
may not be revoked or altered at any time by the employer or a subsequent employer to the detriment of a person entitled to benefits under section 8.2 of this chapter.
As added by P.L.184-2001, SEC.6.
(l) The president pro tempore of the senate and the speaker of the house of representatives may not elect to pay any part of the premium for insurance coverage under this chapter for a former member of the general assembly or the spouse of a former member of the general assembly whose last day of service as a member of the general assembly is after July 31, 2007.Q - What does all this mean? A - It seems to mean that the existing health plan remains in place for retired legislators, their spouses, and employees, but legislators (and their spouses) retiring after this July will not be covered.
Q- Didn't the leadership revoke the plan last year - does this extend it another year? A - I don't know.
SECTION 13 repeals the existing IC 2-3.5-5-5, which appears to be the 4:1 contribution. It currently reads:
Sec. 5. The state shall make contributions to the defined contribution fund on behalf of each participant on June 30 of each year. The amount of these contributions must equal twenty percent (20%) of the annual salary received in that year by each participant for services after June 30, 1989.Q - How was "annual salary" defined - was it the $11,600, or more? A - I don't know.
As added by P.L.6-1989, SEC.1.
Here is a list of the Senators who voted for and against this bill, from an Indianapolis Star story dated 2/28/07.
At least two papers have written strong editorials saying this legislative pay raise, if there is to be one, has to be more transparent, and not tied to the judges and the state employees, etc. (Reminds me of the song - "The knee bone's connected to the thigh bone, the thigh bone's connected to the hip bone", etc.)
There is more to write, but not right now, on, to quote the Star, "the daily stipends, committee bonuses and other ancillary pay, which boost the total earnings of a legislator to an average of more than $40,000 a year" currently. Where are these amounts set out in the law? How often, and how, are they increased?