Lawmakers Seek Review of Allowing Lobbying Organizations in State Pension System

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Humphrey on the Hill

Tom Humphrey's blog on politics and legislative news in Tennessee

NASHVILLE -- Legislators leading a panel that oversees Tennessee's retirement system say they want to review laws that are allowing 14 nonprofit organizations -- 11 of them employing lobbyists -- to participate in the state pension system for state employees and teachers.

Tennessee is one of 20 states that now collectively allow "hundreds of lobbyists" to get public pensions because they represent associations of local government officials, according to an Associated Press report last week. Some states, including New Jersey and Illinois, are considering legislation that would remove such groups from state pension plans, the AP reports.

In response to a News Sentinel inquiry, state Treasurer David Lillard's office provided a list of 14 such groups participating as "quasi-governmental organizations" in the Tennessee Consolidated Retirement System. Overall, TCRS has 210,000 currently employed people as participants and is paying benefits to 115,000 retirees.

Most of those covered by TCRS are state employees, higher education employees, teachers in K-12 public schools or employees of city and county governments. City and county governments have the option of being part of TCRS and many have elected to participate.

The 14 "quasi-governmental" groups combined have 147 current employees as TCRS members and benefits are being paid to 123 of their retired employees, according to the treasurer's summary. Of those 147 current employees, 21 were registered lobbyists this year, according to the Tennessee Ethics Commission.

Lillard stressed that the groups "pay their own freight" in that no taxpayer dollars go into covering their benefits, a contrast to governmental subsidies of payments into the pensions of those employed directly by government.

"Each quasi-governmental entity pays each year the full amount of the costs attributable to all of its current employees and retirees, including its share of the administration expense and investment expense of the pension plan," says a memo prepared by TCRS officials.

Still, House Finance Committee Chairman Charles Sargent, R- Franklin, and Senate Finance Committee Chairman Randy McNally, R- Oak Ridge, say they believe the General Assembly needs to revisit the laws that allow people who are not government employees to be part of a government retirement system -- especially when some are lobbying state government on behalf of the groups they represent.

Sargent and McNally are chairman and vice chairman, respectively, of the Council on Pensions and Insurance, which oversees TCRS and reviews any changes to the system. In this year's legislative session, they backed passage of legislation that repealed authority for three "nongovernmental" groups to participate in TCRS -- though those entities had never exercised their right to join.

Five other organizations have been approved by past legislation to participate in TCRS, but have not joined. The laws authorizing nongovernment groups to be part of TCRS date back to as early as 1961, with several approved in 1973.

"It would be a public policy decision," said McNally of the impending review of whether nongovernmental groups should be part of TCRS, a status that gives such organizations a financial advantage over private pension plans with much smaller membership. "You wouldn't want to be supplementing an individual who actually lobbies."

Both McNally and Sargent cited the Tennessee Education Association, known as the state's teachers union and with a membership of about 46,000 educators statewide, as a potential target for removal from TCRS participation.

TEA is the largest of the nongovernmental groups now in TCRS, with 36 current employees enrolled and 78 former employees drawing benefits. Last year, TEA provided $374,908 in payments to the pension fund and its retirees drew $2,247,833 in benefits, according to TCRS. …