BOISE — A citizens commission that Idaho voters created by constitutional amendment in 1976 voted 5-1 Thursday to close a loophole through which longtime state lawmakers who work briefly in high-paying state jobs at the end of their careers get full lifetime pensions as if they’d been full-time state employees all along.
“Going forward … it is appropriate for us to stop it,” said Dennis Johnson, a commission member, attorney, former board member of Idaho’s state retirement system and the CEO of United Heritage Financial Group.
Reed Larsen, a Pocatello attorney and current chair of the citizens commission, noted that two years ago, he said the retirement perk — which lawmakers enacted as a special exemption only for themselves in 1990 — “didn’t pass the smell test.”
“I really think this is something that we need to resolve,” he said.
House Speaker Scott Bedke said, “I think it is proper. As a member of the legislative branch, I applaud their action today.”
The six-member commission includes three members appointed by the governor, and three appointed by the Idaho Supreme Court; that means it represents both the executive and judicial branches of Idaho’s state government.
Jim Haddock, a retired math teacher at Potlatch High School, and his brother Tom, a CPA and former legislative auditor, have been urging the commission and lawmakers to close the loophole for the past two years. They praised the commission’s decision.
“I’m just really happy with the result — no more enhanced benefit,” said Tom Haddock. “It should never have been in there in the first place.”
The two brothers told the commission that until 1985, Idaho’s Public Employee Retirement System, or PERSI, treated years of part-time service the same as full-time service for purposes of calculating retirement benefits, for all state employees. But that proved costly, as the workers hadn’t paid in full-time shares toward retirement when they were working part-time. In 1985, the Legislature changed the system to split out the part-time service from the full-time service, for all employees, and pay differing retirement benefits accordingly.
Then, in 1990, the Legislature passed a new law, retroactive to 1985, saying that change applied to everyone except state legislators.
“They exempted themselves, thereby increasing the compensation drastically for a chosen few,” Jim Haddock told the commission on Thursday, “and I would make the argument that that was unconstitutional.”
The brothers’ research showed that “somewhere between 26 and 30 people” have benefited from the loophole since 1990.
Fred Birnbaum, vice president of the Idaho Freedom Foundation, also spoke out against the practice, telling the commission, “This loophole allowed some lawmakers to spike their pensions between 500 and 800 percent. … Their payment when they were allowed to collect their pension was five to eight times higher.”
Two years ago, after hearing from the Haddocks, the commission “strongly” recommended that the Legislature revisit HB 100 from 2015, a bill that would have eliminated the legislative carve-out. The bill passed the House, but never got a hearing in the Senate; Bedke had strongly opposed it as unconstitutional, saying only the citizens commission should act on the issue, not state lawmakers.
Bedke told the commission on Thursday that his objection wasn’t to the change the bill would make — it was about the 1976 constitutional provision, which says flat-out, “The legislature shall have no authority to establish the rate of its compensation and expense by law.” It also creates the citizens commission to do that, and allows the Legislature only to vote to reject or reduce a raise; that’s happened just twice, in 1982 and 2010.
“We are ill-equipped to make these types of decisions,” Bedke said, “because we do it arguably at times for a political end. I believe that flies completely in the face of” the constitutional provision, he said. “This was a sharp instrument that they wanted to take out of the hands of the kids called the Legislature.”
The commission’s decision came at the end of a hearing at the state Capitol that stretched for more than four hours, and also included a unanimous vote to give state lawmakers 3 percent raises both next year, to $17,879 a year, and the year after, to $18,415.