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Idaho lawmakers troubled by special interest groups participating in state pension system

Idaho lawmakers troubled by special interest groups participating in state pension system

Dustin Hurst
August 29, 2013
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August 29, 2013
[post_thumbnail] Sen. Fred Martin, R-Boise, says having special interest organizations as part of the state's pension system is a problem that the Legislature should examine.

A little-known section of Idaho Code permits lobbyists at the teachers’ union and other private interest groups to participate in the state’s pension system. Lawmakers say it may be time to address that.

According to a subsection in Idaho Code 59-1302, private interest groups, notably, the Idaho Education Association, the Idaho Public Employees Association, the Idaho Association of Counties and the Idaho School Boards Association, among others, participate in the Public Employee Retirement System of Idaho (PERSI), the state’s publicly funded pension program.

State Sen. Marv Hagedorn, R-Meridian, told IdahoReporter.com that that line of code needs further examination and that the inclusion of the lobbying groups might be problematic.

“It does bother me and has since I got in the Legislature,” Hagedorn, a seven-year veteran of the Idaho Capitol, said. “It’s something we need to dive into.”

He said he’s been chasing an answer as to why the groups are allowed to participate in PERSI for several years, but has yet to find a suitable answer.

Idaho statute provides the only answer: Interest groups formed for and by public workers qualify for the pension program.

The revelation took two state lawmakers by surprise.

“You’re kind of breaking news to me,” said Rep. Paul Romrell, R-St. Anthony. “I would think that you’d have to draw a public salary to be on that.”

Romrell, a member of the House committee that oversees PERSI’s operations, said he’d like to do more research on the issue, but did say that the arrangement might be a “problem.”

State Sen. Fred Martin, R-Boise, also said he would like to examine the issue. Martin sits on the Senate Commerce and Human Resources Committee, which oversees PERSI in the Legislature’s upper chamber.

“Does this seem like a problem to me?” Martin asked. “Yes, it does.”

The deal might cause heartburn for lawmakers for a number of reasons, including how the arrangement affects pensions. Because these private groups aren’t beholden to elected officials and taxpayers, they can often pay more, which means a bigger burden for the pension system.

Former IEA President Sherri Wood, for example, spiked her publicly funded pension by nearly $40,000 a year by working for a higher salary at the group than her previous employer, the Caldwell School District.

Penni Cyr, the IEA’s sitting president, can spike her public pension by more than $30,000 if she stays with the group for at least 42 months, the time span which PERSI uses to determine benefit payments upon retirement.

Some critics might howl knowing that an interest group with millions to spend each year, such as the IEA, often lobbies against reform to public programs and supports government expansion.
For example, while an undercurrent for reform of the PERSI system itself swirled in the bowels of the Idaho Capitol the past few years, the IEA organized against such reform measures, rallying members to action.

The IEA also played a key role in repealing education reform bills passed in 2011.

If lawmakers have an appetite to address the issue next year, they will have to do so delicately. Hagedorn said a reform bill could not kick current PERSI participants off the system, but could only apply to future hires. Those with a vested interest in their pension, Hagedorn explained, have a legal right to their benefits.

“Legally, that belongs to them,” Hagedorn said, adding that attempting to boot current employees “wouldn’t be right.”

Idaho is one of only 20 states allowing private interest groups to participate in public pension programs. Some policymakers across the country are looking at reforming their states laws, especially during a time when states struggle to fully fund their pension accounts.

"It's a question of, 'Why are we providing government pensions to these private organizations?'" Illinois Democratic Rep. Elaine Nekritz told the Associated Press earlier this week.

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