From John Curry, January 30, 2011
Retirement funds: All state workers will pay for fixes
More than $16 billion needed after recession
January 30, 2011
Teachers, law-enforcement officers, state workers and other Ohio public employees must give up more than $16 billion to fix their financially beleaguered pension funds.
Most will have to work longer before they can retire. Many will have to pay more for their pension. Some retirees will see reductions in their annual cost-of-living adjustments.
And the 1.7 million active and inactive state pension-fund members, beneficiaries and other recipients could be hit up for even more sacrifices.
The state's five retirement systems finalized plans last week to restore fiscal health to pension funds battered by economic recession, rising health-care costs and changing demographics. And in the no-new-taxes atmosphere currently enveloping Ohio, the burden was placed entirely on state workers - in contrast to earlier versions of the plans that could have cost taxpayers more than $1 billion.
"There's absolutely no room, philosophically or otherwise, to ask the taxpayers via school levies or income-tax levies or whatever the case may be, to foot a higher bill," said state Rep. Lynn Wachtmann, chairman of the House Committee on Health and Aging.
"In my opinion, I think the taxpayers are extremely generous already."
The Republican from Napoleon plans to roll out legislation on Wednesday designed to implement the proposals. He hopes it will be approved before summer.
Along with the recommendations of the funds themselves, the proposal might shift some of the cost from government employers (taxpayers) to the workers. Currently, the government pays for a portion of employees' retirement, ranging from 14 percent for teachers and state workers to 26.5 percent for State Highway Patrol employees.
The stakes in who picks up that tab are huge. Shifting the burden by a mere 0.1 percent across all five pension systems means $258 million, Wachtmann said.
He said he also hopes to go after pension double-dippers - public employees who retire and collect pensions, and then find other government jobs and get those salaries, too - although that practice should decrease as retirement ages rise.
"We're going to look at more-comprehensive language that may specifically speak to double-dipping," Wachtmann said.
The Ohio Police & Fire Pension Fund will get special attention. It is now the only retirement system without at least a plan to meet state law that requires enough assets to pay off pension obligations in 30 years or less.
Under the plan Police & Fire submitted last week, the payoff would take 36 years - far faster the previous rating of "infinity," but not good enough, Wachtmann said.
"I will not pass a bill out of my committee ... that doesn't comply with state law," he said. "I personally have been asking Police & Fire for over a decade to get their house in order."
Police & Fire spokesman David Graham said the fund's board will look at revamping its plan. It will cost $309 million to bring the proposal into compliance with the 30-year requirement, he said.
Graham said forcing sweeping changes based on a single fiscal assessment of the fund "is inconsistent with the long-term nature of the systems. ... Requiring a system to submit annual recommendations for funding creates unwarranted anxiety with stakeholders and creates an environment prone to reactions or 'solutions' that are not thoroughly discussed or put in the proper context."
Mark Sanders, a Cincinnati firefighter and president of the Ohio Association of Professional Fire Fighters, said that unlike the other pension funds, there has not been an increase in taxpayer contributions to the Police & Fire Pension Fund since 1986 and "that needs to be taken into consideration."
"Our membership certainly knows that taxpayers have been hurting these past few years, but studies have shown the funding level from the employer side since about the mid-1990s has shown to be inadequate in some areas," Sanders said.
Sally Meckling, spokeswoman for the Ohio Civil Service Employees Association - which is the largest state union, representing 34,000 workers - said members generally support moves proposed by the Ohio Public Employees Retirement System. By far the largest state pension fund, PERS' plan affects employees minimally compared with some of the other proposals.
"I think they tried to do as little damage as possible to the employee," she said. "We absolutely believe that we are sharing the sacrifice."
That sacrifice may increase in coming months as officials at the retirement systems tackle exploding health-care costs, which in general were not addressed in plans submitted last week. While health care is not mandated in state pension-fund laws, leaders of the five systems as well as Wachtmann say those benefits should remain.
Dispatch Senior Editor Joe Hallett contributed to this story.
Click image to enlarge.