Thursday, September 10, 2009

STRS, Police & Fire and the OEA also villified by an ORSC State Senator and a Dispatch journalist

From John Curry, September 10, 2009
Pension plans outline reforms
Two seek higher contribution levels from governments
Columbus Dispatch, September 10, 2009
By Steve Wartenberg
Changes proposed by two of Ohio's public pension plans could cost taxpayers about $1 billion by 2020, if approved by the state legislature.
The proposals came during a meeting of the Ohio Retirement Study Council, which met yesterday to address the financial problems of the state's five public pension funds.
The state's pension funds lost billions in assets when the Dow Jones industrial average plummeted 33.8 percent in 2008 and even further the first few months of this year, before the stock market began a turnaround.
Two funds - the State Teachers Retirement System of Ohio and Ohio Police & Fire Pension - asked for an increase in the contributions schools and municipalities make into employee accounts.
"If no changes are made we will eventually be unable to pay benefits," Michael Nehf, executive director of the State Teachers Retirement System, told the retirement council.
The teacher's pension fund asked for schools to increase their contribution from 14 percent to 16.5 percent over five years, starting in 2016.
The pension fund would receive an additional $50 million the first year, a sum that would increase to $250 million a year in 2020, based on the current state teacher's payroll of about $10 billion a year.
The police and fire fund plan calls for a phased-in contribution increase by municipalities that eventually would reach 25 percent.
The increase, coupled with an employee contribution jump from 10 percent to 12 percent, would bring the fund an additional $1.2 billion over the next 30 years, said William Estabrook, executive director of the police and fire fund.
He was not able to provide a breakdown of how much of this total would come from employers and how much from employees.
"It's a no-sell for me," said state Rep. Lynn Wachtmann, R-Napoleon, a member of the study council. "And for the overall legislature it's a tough sell. But don't underestimate the political power of the (Ohio Education Association). There's no end to their greed in asking taxpayers for more money."
Under Ohio law, public pensions must balance their income and expenditures to pay current liabilities for pension benefits within a 30-year period.
Each of the five pension funds presented a plan to achieve this at yesterday's meeting.
The plans of the state's three other public pensions - Ohio Public Employees Retirement System, School Employees Retirement System and Highway Patrol Retirement System - do not call for an increase in employer contributions.
Instead, they rely on increases in employee contributions, reductions in cost-of-living adjustments, increases to the minimum retirement age and changes in how a member's final average salary is determined.
The pension plans for teachers and for fire and police also include changes in many of these areas.
Health-care benefits will remain unchanged, for now, pension officials said, adding that there could be funding problems down the road.
Officials from the Public Employees Retirement System and School Employees Retirement System said they already were within the 30-year requirement.
The plan by the State Teachers Retirement System will reduce its 30-year requirement from infinity to 33.4 years, while the Ohio Police & Fire number would go from infinity to 39 years.
The Highway Patrol plan would reduce its liability from infinity to 30 years.
"There's no way any fund can invest itself out of this dilemma we're in," Estabrook said. "For us to be whole, we'd have to average a 24 percent return (on our investment) for the next four years, and that's not going to happen."
Jim Winfree, executive director of the School Employees Retirement System, said longer life spans mean longer payouts.
"We have 55 people receiving benefits over 100 years of age," he said.
Rep. Todd Book, D-Portsmouth, chairman of the study council, said the proposed increases to employer contributions could be a stumbling block for legislators.
"The state is not in a good financial situation and it's a tough sell," he said. "But we realize the importance of pensions to the retirees and other sectors of the state."
Book said that the plans proposed by the five pension funds are a starting point "and we could look at other options."
The study council, which meets again Oct. 14, eventually will make recommendations to the General Assembly.
"There is a need to act prudently but quickly," Book said. "We could have a bill later this year and start the legislative process."
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