Blade Editorial: Public pensions

From John Curry, February 23, 2010

"In the next few months, the General Assembly may consider measures to reform Ohio's public pension system. Lawmakers can craft politically viable adjustments today, such as making employees pay more into the system or raising the retirement age. Or they can ignore the wake-up call and wait for the inevitable meltdown to cut benefits, raise taxes, or slash government services."

(Or, will they simply kick the can down the road and do nothing due to this being an election year? - John)

http://toledoblade.com/apps/pbcs.dll/article?AID=/20100223/OPINION02/2230317

Toledo Blade, February 23, 2010

Pension wake-up call

PUBLIC pension programs across the country are on a certain path to an unmanageable crisis if corrective action isn't taken immediately. How's that for a deafening wake-up call to state leaders?

As of 2008, according to a new report, states had $2.4 trillion on hand to pay for $3.4 trillion in promised pension, health-care, and other post-retirement benefits. The consequences of doing nothing to shore up public-sector retirement benefits, warns the Pew Center on the States, are a $1 trillion funding shortfall and even more debilitating costs if state-administered pension plans in all 50 states don't address the gap now.

The survey showed Ohio's five public-pension programs in better shape than most, but they also face challenges in meeting the obligations to 1.1 million active and retired members and beneficiaries. For years, the report said, policymakers have failed to fund their state pension systems sufficiently while expanding benefits and relying on overly optimistic assumptions about investment returns.

Then came huge investment losses in late 2008. The stock market downturn likely made the gap between what states put away to cover retirements and what they need to cover long-term obligations much wider. Unless they soon take steps to rein in the annual costs of managing pensions, the exploding financial burden of paying for the future retirements and health care of public employees will fall to taxpayers.

A recent investigation by The Blade and other Ohio newspapers of state pension policies concluded that the taxpayer tab to cover pension expenses for government retirees could top $5 billion a year by the middle of the decade. Many private-sector workers in Ohio won't be collecting similarly generous pensions or other benefits when they retire.

In the next few months, the General Assembly may consider measures to reform Ohio's public pension system. Lawmakers can craft politically viable adjustments today, such as making employees pay more into the system or raising the retirement age. Or they can ignore the wake-up call and wait for the inevitable meltdown to cut benefits, raise taxes, or slash government services.