Article: Police and Fire feel the heat - STRS mentioned
Ohio’s safety forces and their employers — the taxpayers — will need to pay more into the Ohio Police and Fire Pension Fund to keep it afloat over the long term, according to a report released this week.
Police officers and firefighters also could see the retirement age rise and the retiree health-care benefits decrease.
Contribution rates aren’t now enough to support state-required pension and healthinsurance benefits for retirees and their families, according to actuarial firm Milliman Global, based in Seattle.
Without a steep increase in contributions, the health benefits would need to be sharply curtailed or even eliminated, it concluded.
The Milliman report revealed that unfunded benefit liabilities soared 51 percent from 2004 to 2005 at the pension fund, which has 29,650 active members, including local police officers and firefighters, 29,150 retirees and beneficiaries and $10.4 billion in assets.
The growing shortfall sends up a red flag signifying "you will gradually disfund the retirement system" unless changes are made, said Aristotle Hutris, director of the Ohio Retirement Study Council. "Nobody wants that."
The 14-member council, including nine voting members appointed by the General Assembly and governor, oversees the state’s five public-employee retirement systems.
Public-employee pensions are guaranteed by the state, and each retirement system must have an annual actuarial review.
This is the third consecutive year that the the police and fire retirement system’s funding was deemed inadequate to pay its liabilities for pension benefits within the next 30 years, as required by law.
The retirement system also has been in the public eye for the actions of some of its trustees.
Two former board members, Thomas Bennett and David Harker, pleaded guilty to illegally taking thousands of dollars worth of gifts from vendors, including a golfing trip to Scotland and a trip to Ohio State University’s 2002 nationalchampionship football game in Arizona.
Another former trustee, Patrick Patton, was put on probation for billing the system $10,940 for mileage expenses to attend meetings, even though he was driving a state car.
Officials of the pension fund have said the system would file a corrective plan by December, but that is not good enough for state Rep. Michelle Schneider, R-Cincinnati, who leads the retirement study.
"They have 90 days by statute to come to us with a concrete plan to get back" to the required 30-year funding level.
For the past two years, Schneider said, the retirement system told the council that any funding shortfalls would be overcome by improvements in the pension fund’s investment returns.
"That’s not going to cut it this time," she said.
William J. Estabrook, the pension fund’s executive director, said the system has restructured its investment portfolio for better returns, but the fund’s trustees are now looking at other changes.
Many of the proposals would require changes in Ohio laws that govern the retirement systems, whose pension benefits are guaranteed by the state.
Among the possible ideas:
• Increase and change the mix of contribution rates. Employees now contribute 10 percent of their pay into the system, while governments’ rates are 19.5 percent for police and 24 percent for firefighters.
• Raise the minimum-retirement age requirement from 48 with 25 years of service to an undetermined level. The average age of active safety-force members is 53.
• Allow the board to approve benefit increases that are less than the state-required 3 percent cost-of-living adjustment.
• Change parts of the Deferred Retirement Option Plan. This benefit allows eligible members to accumulate a lump sum of money for retirement.
• Restructure health-care benefits and cap the Medicare Part B reimbursement.
Milliman suggests that safety forces and their employers need to contribute 5 more years.
Increasing contribution rates is not unique to the fund. The larger State Teachers Retirement System, which also has a shortfall in its 30-year funding, is considering legislation to permit increases. School boards oppose it.
Legislation regarding health care also is being considered.
A bill introduced by Schneider would allow the state’s largest retirement system, the Ohio Public Employees Retirement System, to set up medical-savings accounts.
Also, state Rep. Louis Blessing, R-Cincinnati, is drawing up legislation to require the state and local governments to make health-savings accounts available to all public employees.
bwolf@dispatch.com
posted by Kathie Bracy at 10:32 PM
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