Pension Decision Raises Bigger Questions

Pension Decision Raises Bigger Questions

By Steve Hunley

The decision issued by Chancellor John Weaver regarding the lawsuit about pensions raises some bigger issues that will certainly confront the county for quite sometime to come.  In essence, Chancellor Weaver’s opinion focused upon one question: does the county mayor and county commission have the right to settle lawsuits involving the county.  Weaver decided clients have the right to settle lawsuits.

What was not settled – – – and it is a mighty important issue – – – is precisely what is at heart of the question: does the pension board have the right to determine retirement compensation on the basis of base salaries or total compensation, which includes vacation pay?  If it is the latter, Knox County taxpayers may already be on the hook for $41 million in unfunded pension liability.  The Knox County Charter is quite clear on pension benefits, saying no county employee may retire at more than 75% of full salary.  The seven retired sheriff’s deputies involved in this case are retiring at various percentages of full salary; as I understand it, at least one of them is being allowed to retire at 97% of full salary.  In what world does someone get to retire at 97% of full salary for life?  That is clearly contrary to the provisions of the Knox County Charter.

One can easily dismiss this by saying it’s merely seven deputies retiring, but it begs the question of how many others will be allowed to retire at a greater rate than allowed by the charter and keep in mind, the pensions must be actuarially sound, meaning they must be funded.  There is also only ONE funding source: you and your tax dollars.  A deficit of $41 million would require at least a 41 cent property tax increase, merely to fund pensions for sheriff’s deputies.

Not to be confused with regular county employees who do not enjoy a lifetime pension, deputies already receive 2 ½  times the ordinary contributions to their pensions as compared to other county employees.  That was decided in a referendum promoted by then-Sheriff Tim Hutchison.  While Mayor Glenn Jacobs and a majority of the county commission wanted to settle the lawsuit, are they prepared to deal with a funding formula that obligates Knox County to come up with an additional $41 million?  Do they have the will to impose a huge tax increase merely to fund bigger lifetime pensions for sheriff’s deputies?

The devil is always in the details and in this instance, that means the funding formula devised by the pension board in approving retirement pensions for deputies.  Defined pension benefits have actually bankrupted some communities and perhaps not coincidentally, Knox County has been in debt ever since voters approved the special pensions for deputies.  Former mayor Tim Burchett spent years attempting to pay down Knox County’s burgeoning debt and a $41 million whack would likely wipe out all the progress made in paying down debt.

While Chancellor Weaver’s decision may have gone against him in this instance, Law Director Bud Armstrong is one of the most honorable men in government anywhere.  Few public officials have been as vigilant in steadfastly protecting the interests of the people he serves: the taxpayers.  Armstrong is fearless, immune to being bullied by special political interests and a man of solid integrity.  Every lawyer has lost a case here or there and Bud Armstrong would be no different, but it does not detract one particle from his ability or honesty.  We are lucky to have Bud Armstrong as Knox County Law Director.

Obviously, any employee is entitled to a fair pension and to reap whatever he or she put aside, but to go well beyond what is stated in the charter is wrong.  Mayor Glenn Jacobs and most county commissioners have insisted they are fiscal conservatives.  Time will tell.

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