Sunday, January 10, 2010

This time the public employee slam comes from the Plain Dealer!

From John Curry
Needed radical rewrite of Ohio's public pensions unlikely when lawmakers draw those pensions
By The Plain Dealer Editorial Board
January 10, 2010
As The Plain Dealer and Ohio's other large newspapers reported last Sunday, local governments in Ohio pay $4.1 billion a year to finance public employee pensions. If the system is left as is, the taxpayers' tab can only rise. That's why the General Assembly needs to talk frankly, and act decisively. With most Ohioans doing more with less, keeping the public pension status quo is neither acceptable nor just. And rising pension costs wallop Ohio's counties, cities, villages and school districts.
The five systems (Public Employees; Teachers; School Employees; Police and Fire; and Highway Patrol) concede the need for change. The question is whether what they have in mind (tweaking the retirement age, for instance) will be enough -- or whether significantly raising taxpayers' share of some systems' costs (Teachers, and Police and Fire) is justifiable. That and a very optimistic stock-market rebound are supposed to fix things.
One especially urgent problem is health care costs: For public employees who retire before they're eligible for Medicare, some Ohio retirement systems pay for health insurance, even though Ohio law doesn't require it. That makes ever-rising health-insurance costs a huge drain. The irony is that if pending congressional "health reforms" lowered Medicare eligibility to age 55 -- now highly unlikely -- many of the Ohio systems' problems would vanish.
Meanwhile, although double-dipping (retiring, claiming a pension, then being re-hired in the same job) is not a significant factor in the five systems' funding problems, it enrages taxpayers. That makes it hard to have a clear-eyed debate. Double dipping needs to end, by grandfathering in public employees already eligible and abolishing future eligibility for everyone else.
Further, Ohio's state and local-government pension benefits are anything but skimpy. According to data gathered by the Columbus Dispatch, the average state and local government retiree in Ohio gets a pension of $25,736 a year.
That's 7 percent more than the national average for government retirees.
In contrast, the national average for private-sector pensions and annuities is $13,326. (Private-sector retirees also can claim Social Security pensions, which average $12,699 a year, but public employees in Ohio don't pay Social Security taxes unless they also hold a private-sector job.)
The historical argument for hefty public employee pensions in Ohio was that public employees earned a lot less than private-sector employees. If that was ever true, it's not now: The Dispatch cites Bureau of Labor Statistics data that reveal virtually no difference in Ohio today.
Moreover, Ohio's public retirees are insulated from the vagaries of the stock market -- while the taxpayers who fund them are not -- by the fact that these are all "defined benefit" plans. That means the payout in retiree benefits is guaranteed, no matter what happens to the investments.
In contrast, more and more American workers are in "defined contribution" plans, such as 401(k) plans: You contribute X dollars; you assume all risks. Making public employees' retirement more secure than that of many of the Ohio taxpayers paying for those pensions is neither practical (as to politics) nor fair (as to justice). And that requires decisive action in Columbus -- not the customary Columbus muddle.
But legislators, regardless of party, typically hesitate to make big changes because of public employee unions' clout. And because legislators themselves belong to the Public Employees system, the likelihood of a sudden breakout of sensible and merited reform on this subject is about as remote as a double dipper seeing the light.
Larry KehresMount Union Collge
Division III
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