Pension Spiking Is Corruption

by Brian Irving
LPNC Communications Director

Once again, the News and Observer has performed an admirable public service by exposing the exorbitant salaries being paid to select state government employees and the manipulation of the law to increase their pensions.

In a series called Checks without balances, the N&O detailed how four community college presidents, two housing authority directors, and a Town of Cary “tennis pro” collected tens of thousands of dollars in perks and benefits in a scheme designed to circumvent salary caps.

Since state law puts a cap on the salaries of certain state employees, the governing board of the organizations these executives ran simply awarded them special benefits and perks, including housing and car allowances. Most of the deals were written behind closed doors, and without a public record. Then the boards manipulated the rules so that the perks could be counted as part of the salaries for the purpose of determine retirement pensions.

Not only didn’t any elected official question the salaries, several lamely claiming they “did not know,” but some insisted the highly paid executives were worth it. The N&O reported many of the boards justified the salaries as “well-deserved” because the organizations are “are well-run, with clean audits and few public complaints,” and in line with the pay of “similar institutions.”

The N&O called this practice “pension padding.” Libertarians call it corruption. Most of the time, people think of government corruption as a politician taking bribes or kickbacks in exchange for their vote, or using their power illegally for private gain.

But corruption isn’t always about money. And it does not necessarily involve doing something illegal, that is, doing something that contravenes the law. The pension padding didn’t violate any laws or regulations. It is corruption nonetheless. Every government program is prone to corruption because it is organized and operated on the basis of who has the most political influence and power.

The fact that elected officials say they did not know about the practice is no excuse; in fact, it makes them either corrupt or incompetent. If they did not know, they should have known, and weren’t doing the job. If they did know, and agreed to the practice, they’re complicit in the corruption.

Lord Acton’s famous observation of human nature, “power tends to corrupt,” applies to anyone, not just politicians.

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