A Senator's statement, a 2006 article worth revisiting and a REQUEST

From John Curry, Sept. 3, 2006

The article below should be placed in the hands of every retired and active educator, police, fire, and public service worker in the State of Ohio. Retirees (and actives) who read this should do their best to forward this to their co-workers and/or co-retirees. Please assist in this request. John State Sen. Lynn R. Wachtmann, R-Napoleon, vice chair of the Ohio Retirement Study Council, said any fix to state pensions would have to recognize that public pensions are much more generous than retirement plans offered by most private employers. That means it’s unlikely that benefits and health plans would be left intact while school districts and cities are asked to cover the higher cost of health care.

"It would be improper in my view to ask the taxpayers to help bail out the system by paying more on the employer side," Wachtmann said. "The system is already extraordinarily generous."

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PUBLIC PENSION PLANS

Systems struggling to provide for retirees

Tuesday, May 30, 2006

James Nash

THE COLUMBUS DISPATCH

Escalating health-care costs and lackluster investments have placed an unprecedented strain on Ohio public pensions — a crisis state lawmakers will have to confront by cutting benefits or sticking cities, school districts and retirees with higher payments.

The systems that provide pensions and health care to 28,000 retired police officers and firefighters across Ohio and 184,000 retired teachers are struggling under the weight of health-care costs that doubled between 1998 and 2003, when pension administrators began reining in costs.

At the same time, the pension systems’ investments — which provide the bulk of the money that pays for retirement checks and health expenses — have been yielding disappointing returns since the stock-market downturn five years ago.

The trends are expected to force lawmakers to pick among a menu of choices in the coming year, none of them appetizing:

• Increasing the contribution rates for cities and school districts, which would take away money used for other purposes, from street maintenance to textbooks.

• Increasing the contribution rates for retirees, which would place financial burdens on many middle-class retirees.

• Raising the retirement age for teachers, police and firefighters.

• Eliminating government-subsidized health care for retired public employees.

The crisis came to a head this spring when the State Teachers Retirement System and the Ohio Police and Fire Pension Fund declared they no longer had enough income and assets to keep up with expenses over the next 30 years as required by law.

Both systems have devised fix-it plans that would saddle school districts, cities and retirees with higher costs while continuing to trim retirement benefits.

The State Teachers Retirement Fund is asking members to pay 2.5 percent more toward their retirements and school districts also to hike their payments by 2.5 percent. The Police and Fire Pension Fund is asking members to increase payments by 2 percent. Cities, counties and townships would increase their contributions toward police officers’ retirements from 19.5 percent to 24 percent of their pay.

The state’s other public-pension systems — the Public Employees Retirement System, School Employees Retirement System and Highway Patrol Retirement System — have enough money to meet their obligations for at least 30 years and are not required to submit reform plans. But those sys- tems are threatened by the same rising health costs as the pension funds for police, firefighters and teachers, said Aristotle L. Hutras, executive director of the Ohio Retirement Study Council.

State lawmakers must approve any changes in contribution rates, and some are loath to increase the burden on municipalities and schools.

"We have school levies failing all over the place," said Rep. Michelle G. Schneider, R-Cincinnati, chairwoman of the House’s Retirement and Pensions subcommittee. "There’s little or no support from the Ohio legislature to force school districts to increase their payments into the retirement plan."

Likewise, the influential lobby of Ohio cities and counties is resisting the Police and Fire Pension Fund’s prescription to spread the higher costs between cities and retirees.

John Mahoney, deputy director of the Ohio Municipal League, dryly predicted that lawmakers will be in no hurry to act this year.

"Every police officer and firefighter in Ohio would take a hit, and every city and county would take a hit," he said of the Police and Fire Pension Fund’s plan. "I don’t think anything’s going to happen in an election year."

An increasingly vocal cadre of retiree activists, however, says such complacency is partly to blame for the precarious condition of public pensions.

Molly Janczyk, of Pickerington, a retired teacher who is active in the nonprofit Concerned Ohio Retired Educators, said leaders of the State Teachers Retirement System spent extravagantly in the boom years of the 1990s and did not set aside enough money in the system’s dedicated health-care fund. The teachers fund contributes 1 percent of its revenue to the health-care stabilization fund, less than Ohio’s four other public-pension systems.

"The battle they’re trying to fight now could have been done less painfully on a more incremental level," she said.

Janczyk said the proposed increases in contributions would raise the monthly healthcare premiums for her and her husband from $649 to $829. That’s on top of similar increases in recent years, she said.

"What’s happening is anybody who’s able-bodied is having to go back to work," she said. "Those who are not are truly suffering. It’s been catastrophic — people are selling their homes, people are having to choose between physician visits and prescriptions."

Paul Boyer, a retired Limaarea teacher who also is active in the retired teachers group, said lawmakers contributed to the crisis by defying state Supreme Court rulings that found the state’s system for funding schools unconstitutional. Boyer and other current and retired teachers argue that the state can’t get health care for retirees without substantially raising teacher salaries. Otherwise, people will flee the profession, he said.

"(Lawmakers) have had many opportunities to do what the Supreme Court ordered them to do on school funding and they refused to do it," Boyer said. "(Pensions) are the legislators’ problem."

State Sen. Lynn R. Wachtmann, R-Napoleon, vice chair of the Ohio Retirement Study Council, said any fix to state pensions would have to recognize that public pensions are much more generous than retirement plans offered by most private employers. That means it’s unlikely that benefits and health plans would be left intact while school districts and cities are asked to cover the higher cost of health care.

"It would be improper in my view to ask the taxpayers to help bail out the system by paying more on the employer side," Wachtmann said. "The system is already extraordinarily generous. "

jnash@dispatch.com