'We'll see a bill, maybe by the end of the year': Rep. Todd Book, Chairman of the ORSC

From John Curry, September 11, 2009

State employees face changes to pensions: System is financially unsustainable
Recordpub.com, September 10, 2009
By Marc Kovac
Record-Courier Capital Bureau

COLUMBUS — State lawmakers will have to decide whether to increase retirement ages, require greater contributions from public employees and employers and/or decrease cost-of-living adjustments for pension payments.

That’s after a state panel heard recommendations Wednesday from Ohio’s five public employee retirement systems for dealing with the economic downturn.

The groups, representing police officers and firefighters, teachers and school employees and other public workers, have been hit hard by stock market declines. The separate boards that oversee each have outlined recommendations for reducing costs and ensuring adequate funds to cover retiree obligations in years to come.

“These are not easy decisions that we’re going to be dealing with,” said Rep. Todd Book, a Democrat from McDermott, who serves as chairman of the Ohio Retirement Study Council. “... We cannot invest our way out of this situation.”

The Ohio Retirement Study Council, which includes six lawmakers and three citizen voting members appointed by the governor, heard the recommendations during a meeting that lasted several hours Wednesday at the Statehouse.

But final decisions on pension fund changes are far from complete. Lawmakers next will begin writing legislation to implement the recommendations.

“Over the next several months, we will be drafting a bill, working with the interested parties ... to try to put something together that will start the legislative process,” Book said. “... We’ll see a bill, maybe by the end of the year.”

He added, “Clearly, the quicker the better. But anytime you do something fast, you run the risk of causing more problems than you do good. We’ll take our time to make sure that it’s done properly.”

The fund recommendations were not without dissent among study council members, particularly Republicans who questioned the impact of increased employer contributions on taxpayers.

“The systems that are asking the taxpayers for more money I think are missing a big part of what’s going on with Ohio’s economy right now with high unemployment,” said Rep. Lynn Wachtmann, a Republican from Napoleon and member of the study council. “A lot of people in the private sector have had to take pay cuts, reduce weeks, etc. And I think the pension systems that seem to expect the taxpayers to have never-ending outlays of cash need to relook at their requests.”

Wachtmann said he thought it was “extremely inappropriate” to require public employers to pay more in contributions, given the present economic conditions.

“I think it would be appropriate if they would want to ask their active members to pay more,” he said, adding, “If our pension systems are in trouble, we as members should be willing, I think, to foot the bill and not expect the taxpayers to.”

Among the changes proposed by the five pension funds were:

• State Teachers Retirement System of Ohio: Increase employee contributions to 12.5 percent from 10 percent; increase employee contributions to 16.5 percent from 14 percent; increase the number of years required to be eligible for retirement; and reduce the cost-of-living adjustment to 1.5 percent for employees retiring in mid-2011 from 2 percent.

• Ohio Police and Fire Pension Fund: Increase and equalize employer contribution rates for firefighters and police officers (increasing the latter to 25 percent from 19.5 percent); increase the employee contribution rate to 12 percent from 10 percent; increase the retirement age to 52 from 48 for new hires with 25 years of service; and increase final average salary calculation by taking five years of pay into consideration rather than three.

• School Employees Retirement System of Ohio: Increase the age for retirement with no reduction in benefits to 67 for employees with 10 years of service and 57 for those with 30, up from 65 and 55, respectively; and make additional eligibility changes for employees taking early retirement.

• Ohio Public Employees Retirement System: Increase the retirement eligibility age by two years for all divisions; increase the final average salary calculation by taking five years of pay into consideration rather than three; and modify the cost of living increase to match the consumer price index up to 3 percent.

• Highway Patrol Retirement System: Decrease cost-of-living adjustments to 2 percent from 3 percent for some retirees; increase the employee contribution rate to 11 percent from 10 percent; increase the final average salary calculation by taking five years of pay into consideration rather than three; and reduce the employer contribution for health care.

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