Public money, private secrecy

Nongovernmental organizations that qualify for government pensions can have it both ways.

Staff WriterJuly 3, 2011 

  • The state treasurer's office manages eight pension plans covering 850,000 employees and retirees with assets of more than $74 billion. The Local Governmental Employees' Retirement System covers cities, counties, towns and villages, as well as related local government entities. More than 880 entities with employees or retirees are in the plan.

    The treasurer's office sets the level of participation for local government employees and employers. Currently each is kicking in the equivalent of 6 percent of employees' salaries. The treasurer invests that money, and those earnings generate the majority of revenues for the pension funds.

    The recession hurt those investments, and as a result, the treasurer told local governments last year they would have to increase their contributions to the system, costing several Triangle governments anywhere from several hundred thousand to a few million dollars.

The N.C. League of Municipalities takes in hundreds of thousands of taxpayer dollars annually from its member towns, villages and cities, which pay dues ranging from $750 for the tiny town of Spencer Mountain to $55,230 for the city of Raleigh.

Its staff of more than 90 employees is eligible for public pensions, and as of this year at least a dozen retirees were collecting them.

But if you make a request to see the salaries the league pays, Executive Director Ellis Hankins will tell you that's none of the public's business.

"Our position, our opinion, is that this organization, which is not a governmental agency, is not subject to the public records statute," Hankins said.

The league serves as the lobbying arm for municipalities and operates three self-insurance pools for them. It is not the only organization that shields its financial operations while staff members benefit from one of the best perks of public employment. The N.C. Association of County Commissioners receives the same treatment, as do police officers with the Eastern Band of the Cherokee Indians.

Jane Pinsky, director of the N.C. Coalition for Lobbying and Government Reform, a nonpartisan nonprofit, said these organizations shouldn't expect to reap the rewards given to public agencies without shouldering the responsibilities, which include transparency in their operations.

"If your organization wants to participate in the pension system, then your organization has to disclose salaries," she said. "You can't have it both ways."

Well-paid employees

In 1946, state lawmakers voted to include the league in the local government pension fund, which is managed by the state treasurer's office. Lawmakers gave the counties' association the same access 13 years later.

The Cherokee police officers became eligible in 1987 after lawmakers passed a law that gave them jurisdiction to arrest people on the reservation who are not members of the Eastern Band. The law also sought to provide state law enforcement certification for the officers.

The pension system guarantees that a retiree will retire with a specific percentage of his or her salary, which can reach roughly 60 percent of the average of the employee's highest four years of pay, depending on length of service. If investment gains don't cover promised pensions, governments can be required to kick in extra money. That money comes from taxpayers.

Pension records show that league retirees are some of the best paid in state or local government.

General Counsel Andy Romanet, for example, retired in 2009 after 21 years with the organization. His final salary was $183,152, but he also received a lump-sum unused leave payment of $43,179, or the equivalent of 12 weeks of salary; a longevity payment of $9,229; and a $4,365 bonus.

Such additional compensation can be included to boost pensions. Romanet's pension is $52,602 a year.

The league has a Board of Directors, made up of municipal officials, but they do not set salaries, said Latimer Alexander, the board's first vice president and High Point's mayor pro-tem. He referred all salary questions to Hankins, who said the board does set his salary as well as salary ranges for positions. Hankins said he sets the salaries for employees within those ranges.

Of the 12 league retirees in the pension system, four earned salaries of $100,000 or more, treasurer's office records show. Three retirees received lump-sum leave payments of at least $13,000.

Sheriffs' association, too?

Though these entities have been members of the pension plan for many years, their participation wasn't well known until a debate in the General Assembly last month as the session wound down. State Sen. Tom Apodaca, a Hendersonville Republican, sought to amend a bill to allow the N.C. Sheriffs' Association's 13-member staff to join the pension system.

The amendment drew an outcry from the N.C. Police Benevolent Association. The sole original intent of the bill was to make it easier for young police officers to go on early retirement disability after being injured in the line of duty.

The association accused Apodaca of trying to "hijack" the bill to help the sheriffs' association's Executive Vice President Eddie Caldwell get into the retirement system.

The ensuing debate caused Apodaca to remove the provision, but he later moved it into another bill that passed the Senate. It is alive for next year's session.

Apodaca said there is no reason for the sheriffs' association not to be included since it is similar to the league of municipalities and the association of county commissioners. The association is supported in part by fees from the 100 sheriffs' departments across the state, lobbies lawmakers on behalf of the sheriffs, and has been assigned duties by the legislature.

The sheriffs' association is a nonprofit organization that raises a substantial amount of income through memberships sold to the public.

The attorney general released an opinion last month raising concerns that admitting the association could run afoul of federal tax rules and affect the pension system's status as a government plan.

Apodaca said he still thinks the association should be allowed to participate.

He also said all participants in the plan should make their salaries public.

The nonprofit group's tax returns are public records, and the law requires it to report the five highest salaries of employees who earn $100,000 or more. In the association's case there's only one: Caldwell. His compensation was nearly $290,000 in 2009, the most recent year available.

'There's no connection'

Caldwell said the sheriffs sought the change so the association could keep hires from sheriffs' departments on the public pension plan. He did not think the association should have to open its books to the public for that to happen.

"There's no connection between the two that I see," he said.

Staff writer Joseph Neff and news researcher David Raynor contributed to this report.

dan.kane@newsobserver.com or 919-829-4861

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