Some of you have asked about ORSC member Lynn Wachtmann and if he is pro public servant.........

Wellllll........let's see what he had to say about public servants:

From John Curry, July 21, 2010
Click images to enlarge.

Rep. Lynn Wachtmann, a Napoleon Republican who also sits on the Ohio Retirement Study Council, dismissed as outdated the argument that government employees deserve better retirement packages than their private-sector peers because they receive less pay. "The taxpayers of Ohio, who are footing the bill for all of this in the end, need to realize how generous the public-pension systems - all of them - are compared to private-sector retirement plans," he said. "Most of our private-sector employers would go bankrupt if they had to pay the kind of money into employee retirements that our public-sector employers do."

Mr. Wachtmann is one of nine voting members of the council, which includes three state senators, three representatives, and three governor appointees. It considers changes to the five public pension systems and makes recommendations to the legislature.

Does that answer your question? : ) John

http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20100103/NEWS24/1030309/0/FRONTPAGE

Article published January 3, 2010

Government cutbacks spare public pensions

Ohio trend signals rising taxpayer burden

By JAMES NASH
COLUMBUS DISPATCH

First of two parts

COLUMBUS - At a time when budget cuts are forcing Ohio schools to lay off teachers and cities to raise taxes, eliminate jobs, or both, one expense government leaders have not cut is pensions for their workers.

The pension cost to local governments in Ohio now stands at $4.1 billion a year. If current trends continue, the pension costs will grow by a range of $604 million to $768 million during the next five years, according to a Columbus Dispatch computer analysis done as part of a project by the Ohio News Organization, a cooperative of the state's eight largest newspapers including The Blade. The cost of pensions is directly related to the size of government payrolls.

On top of that, two of the five public pension systems are asking taxpayers to dig deeper to cover shortfalls, potentially adding $400 million more to the tally by 2020. All told, the taxpayer tab easily could top $5 billion a year by the middle of the next decade.

Those tax dollars will help ensure that retired teachers, local police officers and firefighters, state workers, and other government employees receive retirement benefits that many workers in the private sector can only envy - although direct comparisons are difficult.
Retirement incomes for the most experienced government
employees top out at 88 percent of their active-duty pay. Unlike most private-sector workers, whose retirement is driven by the strength of the stock market and their 401(k) plans, government employees are guaranteed to receive pensions.
Chart: Ohio's pension system

In addition to higher average retirement incomes, government retirees in Ohio also get government-sponsored health care, can retire as young as 48 for police and firefighters, and have the opportunity to "retire" and collect a full pension while going back to work, often at full pay for doing the same job. Such "double-dippers" were paid more than $741 million by the State Teachers Retirement System last year and $240 million by the Public Employees Retirement System, records show.
In Toledo, the mayor is a double-dipper.

Since starting his current term in January, 2006, Carty Finkbeiner has drawn his annual salary of $136,000 in addition to a state pension, for more than two decades in elected and unelected positions. He leaves office tomorrow.

And because he is already receiving a Public Employees Retirement System pension, Toledo taxpayers have paid $75,221 into a state pension annuity as an additional retirement fund for Mr. Finkbeiner.

Some are questioning whether local governments' budgets can handle higher pension premiums given that libraries, school districts, and cities are receiving less tax revenue.

Lucas County government units and school districts spent $168 million in 2008 to satisfy pension obligations. That's an increase of 15 percent from four years ago, when pension costs were $145.2 million.

Increases in pension costs will mean cuts elsewhere, warned John Mahoney, executive director of the Ohio Municipal League, which represents cities. "I can't pay that and still employ 1,700 police officers," he said. "The money's just not there."

A historic shift
For decades, nearly all government workers have been in traditional pension plans that pay fixed amounts at retirement - usually calculated as a percentage of their highest annual salaries multiplied by years of service.

At the same time, private employers have moved dramatically away from such defined-benefit plans. In 1974, 71 percent of private retirement-plan assets were in defined-benefit plans. By 2008, that number had decreased to 24 percent, according to the nonpartisan Employee Benefit Research Institute, although some private employers still offer a combination of defined-benefit and 401(k)-type plans.

Despite that historic shift in the private sector, many government leaders say public pensions are all but untouchable. "The goal should be to continue the defined-benefit plan," said state Rep. Todd Book, a Portsmouth Democrat who is chairman of the Ohio Retirement Study Council. "It's good for the employees of the state. It's also good for the economy of the state. You have retirees pouring billions of dollars into the economy."

But with pension plan investments faltering in a rough economy and costs increasing because Ohio's pension funds also pay for retirees' health care - a benefit not mandated by state law - taxpayers may have to pour millions more into the retirement systems just to keep them afloat.

The State Teachers Retirement System and the Ohio Police & Fire Pension Fund are in violation of state law requiring them to have enough money to cover their pension obligations for 30 years. Thus, they are asking school districts, cities, counties, and other local units of government to contribute more toward employee retirements. And they are asking more of the employees.

Under the proposed changes, an amount equal to 29 percent of teacher salaries - 16.5 percent from school districts and 12.5 percent from teachers - would go toward pensions. An amount equal to 37 percent of police and fire employee salaries - 25 percent from municipalities and 12 percent from employees - would be earmarked for retirement income.

A source of friction
The increase doesn't sit well with some private-sector retirees whose plans have all but vanished.

"I think it's ridiculous," said Larry Rausch, 71, of Lancaster, Ohio, who retired from Sears in 1998 before the owner of Kmart purchased the retailer and slashed retirement benefits. "I don't know how they can expect guys like me to pay their retirement." ABOUT THIS PROJECT This project is the work of the Ohio News Organization, a cooperative formed in 2008 by the state's eight largest newspapers:

The Blade, the (Cleveland) Plain Dealer, the Cincinnati Enquirer, the Columbus Dispatch, the Dayton Daily News, the Akron Beacon Journal, the Canton Repository, and the (Youngstown) Vindicator.

After reporting locally about extensive cuts in services in their communities, the editors of the newspapers decided to examine the state's pension policies. The objective: to explore the impact of state-mandated pensions and retiree health insurance on local communities and whether potential increases can be absorbed.

Many government retirees say pensions are part of their compact with their employers and, by extension, the public. "We're trying to get away from calling it taxpayer money to calling it deferred compensation," said David Parshall, a retired Southwest Licking Local School District science and math educator who heads a statewide group of retired teachers.

Donna Seaman, who retired in 2002 from a 30-year career as a teacher and elementary principal in Shelby City Schools in Richland County, sees both sides of the issue. School districts are hard-pressed to absorb increases in retirement costs without harming educational quality, yet teachers have come to rely on their pensions, said Ms. Seaman, whose daughter is a teacher.

"I don't expect that they will be able to have the same comfortable retirement that we have now - not that it's that comfortable," she said. "I'm very concerned about the stability of the system."

In some parts of Ohio, cities and schools pick up part or all of their employees' share of retirement costs, increasing the cost to taxpayers.

Columbus, for example, absorbs the full 10 percent city-employee share of retirements - at a cost of $43 million a year to the city. Faced with a budget crunch, Columbus officials are attempting to scale back that benefit.

The same is true in Toledo, where generous city labor contracts over the years shifted millions of dollars of pension payments from city workers to city taxpayers. The projected cost to Toledo taxpayers of the pension "pickup" for city workers will be $13.9 million this year, out of the total $40.2 million in city pension costs in 2010.

Preserving the plan
The requests for more money from local governments by the State Teachers Retirement System and the Ohio Police & Fire Pension Fund are expected to go before state lawmakers early this year. But there's already resistance to sacrificing textbooks, police cars, and staffing levels today for the long-term security of retirees tomorrow.

Rep. Lynn Wachtmann, a Napoleon Republican who also sits on the Ohio Retirement Study Council, dismissed as outdated the argument that government employees deserve better retirement packages than their private-sector peers because they receive less pay. "The taxpayers of Ohio, who are footing the bill for all of this in the end, need to realize how generous the public-pension systems - all of them - are compared to private-sector retirement plans," he said. "Most of our private-sector employers would go bankrupt if they had to pay the kind of money into employee retirements that our public-sector employers do."

Mr. Wachtmann is one of nine voting members of the council, which includes three state senators, three representatives, and three governor appointees. It considers changes to the five public pension systems and makes recommendations to the legislature.

So far, the panel is not discussing the idea of following the private sector into 401(k)-type plans. But Tom Ash, lobbyist for the Buckeye Association of School Administrators, said the idea is being floated informally in some circles. He labels it a nonstarter. "Our goal is going to be to preserve the defined-benefit plan because, as a matter of public policy, we think it makes sense," Mr. Ash said.

'Significant issues'
House Speaker Armond Budish (D., Beachwood) acknowledged that the pension systems have "significant issues" but said the state should strive to protect benefits for retirees.

Few local government officials are chafing at how much they contribute to employee pensions - in part because many of them will receive the same pensions - but they're not thrilled with the prospect of an increase.

Parma Superintendent Sarah Zatik said her school district could ill afford raising payments for retirees. The suburban Cleveland district cut $6.5 million from its $150 million budget and slashed 50 high school teachers after voters rejected four tax-increase requests in a row.

But underscoring the political sensitivity of the issue, Ms. Zatik wouldn't say whether existing retirement costs are too high. If she backs the pension plans, a district spokesman explained, the district would take heat over the costs. If she suggests trimming the plans, she would alienate teachers already facing cuts.

The Municipal League's Mr. Mahoney said his group will fight the proposed increases in pension costs. "They want to take both police and fire up to 25 percent of payroll," he said. "In these times, well, good luck with that."

Organized labor
Politically powerful labor unions representing government workers figure to be influential players in the debate. They reject the idea of a fundamental crisis in the pension funds, saying the funding shortfalls can be remedied with a few tweaks - raising retirement ages, boosting contributions from employers and employees - and by counting on investment markets to rebound.

Ohio pension systems are relying on year-over-year investment growth of 7.5 percent to 8.5 percent. "All classes of investors suffered during the market decline of 2008 - the largest downturn in 70 years," five unions representing the majority of government workers in Ohio said in a joint statement. "The long-term strategy and design of our retirement systems smooths gains and losses over a longer period of time, so [defined-benefit] plans are better able to reduce volatility. The same cannot be said of [defined-contribution] plans."

But the assumption of average 8 percent investment growth - without which the pensions may have to come back and ask for more tax money or slash benefits - seems overly rosy, said Leo Kolivakis, a pension consultant and writer.

AFSCME Ohio Council 8, OCSEA AFSCME Local 11, the Ohio Education Association, the Ohio Federation of Teachers, and Service Employees International Union District 1199 say it would be folly for government employers to follow the lead of private companies into less-secure 401(k)-type retirement plans.

The unions cited statistics from the National Institute on Retirement Security that 357,234 retired government workers in Ohio received a total of $8.41 billion in pension benefits from state and local pension plans in 2006, with most of that sum going back into the state's economy via purchases of medications, cars, and other products and services. "These dollars are vital to fuel Ohio's economic engine," the unions said.

That argument is less persuasive among private employers. In 1996, investments in 401(k)-type defined-contribution plans overtook traditional pensions, and the trend has accelerated since then, according to the Employee Benefit Research Institute.

The consulting firm Watson Wyatt reported in October that the value of retirement benefits as a proportion of income had declined from 7.8 percent in 2002 to 6.9 percent in 2008 among the 183 corporations it surveyed. Much of that decline was attributed to companies switching from guaranteed pensions to defined-contribution plans. In contrast, retirement benefits account for at least 14 percent of payroll for all of Ohio's locally funded public pensions - topping out at 24 percent for firefighters in the Ohio Police & Fire Pension Fund.

The issue of pay
Mr. Book and other defenders of public pensions say that government employees trade lower wages for more generous retirement plans. But that's not necessarily the case. According to U.S. Department of Labor statistics, there is virtually no difference between private-sector and public-sector pay in Ohio.

But there is a difference in the willingness of private employers to take on the risk of having to bail out pension plans if investments go sour or costs rise sharply, said Alan Glickstein, a senior retirement consultant for Watson Wyatt. Still, traditional pension plans generate more bang per investment buck because of the economies of scale of handling billions of dollars in retirement assets for tens of thousands of retirees, Mr. Glickstein said. Traditional pensions can offer the same level of benefits at 30 percent less cost than 401(k)-type plans, he said.

Holding the line
Leaders of all five state pension systems say they're committed to keeping retiree health care and full pension benefits, even if some terms become less generous.

Michael Nehf, head of the State Teachers Retirement System, said keeping pensions for teachers is "extremely important." The alternative is welfare for some retirees.

The other major school pension system is taking a different approach. The School Employees Retirement System, which represents nonteaching employees, is not asking school districts to contribute more toward its employees' retirements, which average $879 a month - far lower than their counterparts in the other state pension systems and below the federal poverty level. Some of the nonteaching employees are part-time.

Forcing school districts to boost their contributions would invariably mean cuts elsewhere, such as eliminating busing, said James Winfree, executive director of the School Employees Retirement System. "We understand the financial stress that school districts are under," he said.

Blade politics writer Tom Troy, Columbus Dispatch reporter Doug Caruso, and (Cleveland) Plain Dealer reporter Patrick O'Donnell contributed to this story. Dispatch Public Affairs Editor Darrel Rowland performed the data analysis.