West Virginia’s Public Employee Retirement System (PERS) uses a specific calculation to determine the annual benefits for retirees. For example, for plan participants retiring after 1970, the state takes two percent of the member’s “final average salary,” then multiplies it by years of service.
“Final average salary” is defined as the average of the employee’s highest 36 consecutive months of pay after 15 years of employment. (There is a different calculation for employees with less than five years of service.)
Members of the West Virginia Legislature who decide to participate in PERS have the same benefit. However, there is a notable caveat for lawmakers that works in their favor.
Currently, long-time legislators (those with 13 consecutive regular sessions) can count each legislative session as a year of employment, even though the regular session lasts 60 days. Lawmakers spend lots of out-of-session time dealing with constituent issues, but the job and the pay are still part-time. The base salary is $20,000 with extra pay for interim committee members or extraordinary sessions.
Additionally, a few lawmakers have been able to put in 15 to 20 years in the Legislature, and then move up to a much higher paying state job. If they can stay in that job for three years, that increases the size of their state pension dramatically.
That would change under a bill introduced by Senator Robert Karnes (R-Upshur). His bill says that, going forward, legislators’ years of service will be calculated by the day. If a legislator attends all 60 days of the session, they get credit for only 60 days of employment.
Karnes estimates that, counting the regular, extended and extraordinary sessions, it would take about three to four years for a legislator to acquire enough days to qualify for one year of employment.
Additionally, the bill says the size of the pension will be determined by calculating the average pay for their total years of service, not just the highest three years.
According to my math, currently, a lawmaker who has 15 years of service at $20,000 a year, but then tacks on three years in an $80,000 state job, would qualify for a $28,800 annual pension. But under the new system, that same legislator would get $10,800.
Frankly, there’s not all that much savings here to PERS, but Karnes says it’s an issue of fairness. He argues, correctly, that lawmakers qualify for a benefit that is out of reach for the average state worker.
It’s a loophole in the law that should be changed.