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Public employees on notice

Published: Sun, June 10, 2012 @ 12:00 a.m.

By Bertram de Souza (Contact)

What was the message delivered Tuesday by voters in Wisconsin, San Diego and San Jose? Quite simply this: We, the employers of public sector workers, are no longer willing to pay for pensions and benefits that are many, many times more lucrative than what the average private sector employee can expect upon retirement.

Wisconsin Gov. Scott Walker’s impressive defeat of the effort by unions and Democrats to oust him from office captured the nation’s attention and was the top story from the election. Since becoming governor in 2010, Walker has taken on the public employees’ unions by stripping them of their collective bargaining rights. One of his targets is the public pension system that he says, quite correctly, is a major drain on the state’s treasury.

But more important stories unfolded in San Diego and San Jose because they demonstrated what can be done at the local level to change the public pension system.

Here’s how the New York Times described the game-changers on the West Coast:

“Residents of San Diego and San Jose voted overwhelmingly to cut the pension benefits they give city workers. And they did so in a way governments traditionally avoid: moving to cut not just the benefits of future hires, but also for those of current city workers, whose pensions generally have much stronger legal protections than those of private-sector workers.”

The keyword in that quote is overwhelmingly. It reflects the national mood of private sector workers who have seen their pensions frozen, or eliminated, and have watched as their 401(k) plans have tanked.


But while this reality has caused families to rethink their retirement plans, public sector workers keep retiring at relatively young ages with pension benefits that are forcing states to deal with ballooning unfunded liabilities.

In San Jose, which is a charter city like Youngstown, Measure B reduces pension benefits not only for future hires, but current employees’ remaining years on the job, according to the Silicon Valley MercuryNews.Com.

MercuryNews.Com listed the following changes to the current pension plans: current employees keep the pension credits already earned but must pay up to 16 percent more of their salary to continue their benefit or choose a more modest and affordable plan for their remaining years on the job; limit retirement benefits for future hires by requiring them to pay half the cost of a pension.

It is noteworthy that the mayor of San Jose is a Democrat.

In San Diego, the plan approved by the voters would require future hires to enroll in a defined-contribution plan, similar to a 410(k) plan, the New York Times reported. Public employees would be responsible for investing their own retirement money, and if their investments fail, the city’s taxpayers will not have to step in.

Of great significance is the provision that freezes the amount of an employee’s pay used to calculate pension benefits. The Times noted that San Diego officials estimate that it will save $1 billion over the next 30 years.

Why is this significant? Public pensions are calculated using a formula that includes the average of the three highest earnings years. That results in public employees shopping around for high-paying jobs as they approach retirement age.

Public response

Such abuse of the system has triggered a public response that is sweeping the nation. In Ohio, under the Public Employment Retirement System, the employer (taxpayers) contributes 14 percent of the annual salary for the pension, while the worker kicks in 10 percent.

The state’s five public pension plans are undergoing some legislative tweaking in Columbus to deal with projected revenue shortfalls, but nothing major is being proposed.

Therefore, it’s up to Ohio Gov. John Kasich, who took a beating last year at the polls when voters strongly rejected his collective bargaining reform law.

What happened in Wisconsin, San Diego and San Jose should inspire Kasich, a Republican, and the GOP-controlled General Assembly to make the kind of changes to the system that voters are demanding.

And they should go a step further: make all public pension records public, so the taxpayers know how much money their servants are receiving in retirement for the rest of their lives.


1Tigerlily(488 comments)posted 2 years, 3 months ago

The people of Ohio have already spoken about what they want from Kasich, DeSouza.

They rolled his right-to-work state agenda back.

To continue in the direction he initially took would NOT be making changes that the voters are demanding.

You are a politically biased commentator, and people can only laugh at your opinions at this point.

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2theotherside(333 comments)posted 2 years, 3 months ago

The pension reform legislation is pending in the Ohio house and it makes significant changes to eligibility, cost of living, length of service, and increases to member contributions with no increase to the taxpayer, all while making the systems solvent as required by the law. In addition, the public retirement systems of Ohio pump billions of dollars into state and local economies through those benefits. Dollars that improve the bottom line for businesses like the Vindicator and help pay the salaries of employees like de Souza. If de Souza is advocating for the elimination of public services like police, fire, and teachers through his class warfare rants then so be it but shooting himself in the foot by calling for the elimination of the billions of dollars that help to pay his salary through newspaper subscriptions sure seems foolish to me.

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3Knightcap(699 comments)posted 2 years, 3 months ago

The public sector likes to think they are special. They're not. The middleclass cannot keep handing over their hard-earned money to pay for benefits that are way better then the private sector. The average contribution for health-care in the private sector is 23%. Some are paying as high as 50%. In the private sector some plans charge more if you smoke, more if you have high blood pressure, more if you have high glucose readings and more if you are overweight. I see nothing wrong with the public sector paying 20% of their heath-care.

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4Photoman(1004 comments)posted 2 years, 3 months ago

The weakness of prior legislators in dealing with union demands has come home to roost. These legislators bought votes by caving in to most demands with little regard for future costs to the rest of us yet this good ole boy network still exists, you know, you scratch my back and I'll scratch yours. From now on take a much better look at the person for whom you're voting. Forget "D", "R" and "I" and pay really close attention to what they're saying AND doing.

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5stonehead(25 comments)posted 2 years, 3 months ago

we live in OHIO encase you forgot. WE voted it down. if you like Wisconsin so much MOVE THERE.

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6chuck_carney(499 comments)posted 2 years, 3 months ago

SB5 was voted down because voters viewed it as a threat to collective bargaining, both at the private and public levels.

An issue to reduce benefits for public employees would pass overwhelmingly in Ohio. in Wisconsin 38% of private union families voted against their brothers ans sisters of the public unions; they supported Walker.

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7badeepster(111 comments)posted 2 years, 3 months ago

Well here's deScumbag back for his 723rd article bemoaning public employee pensions and every one of the articles says the same thing. No wonder the Vindy is about to go under! Hey deScumbag, don't be jealous because you work at a dump that probably pays you minimum wage. Save your money and get a ticket back home, wherever that is.

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8AnotherAverageCitizen(1174 comments)posted 2 years, 3 months ago


Misery loves company. Since your employer will not contribute to retirement, you don't want anybody to get a retirement. Since many corporations cut benefits, and Repubs just respond by saying, hey its a job, take it or leave it. This high unemployent bush started is just what the 1% want. Compitition for employement, lowest bidder wins.

Why so many of the 99% support and back up the 1% is beyond me. Why should we want to take away what somebody else gets, just because it was takes away from me? Yes I agree public workers should pay 20-25% toward benefits.

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9AnotherAverageCitizen(1174 comments)posted 2 years, 3 months ago

I believe Mr kasich is on notice also:

A developing story out of Ohio is getting the attention of the progressive press: the FBI is currently investigating claims that Governor John Kasich made promises of political influence and threatened the jobs of those who would not help him replace those in power with his cronies.

Two months ago, Portage County Republican Party Chairman Andrew Manning asked the FBI to investigate the situation after he was offered influence in state government appointments in exchange for stepping down and allowing one of Kasich’s operatives to take his position. Manning’s attorney, David R. Langdon, announced yesterday that the FBI is indeed investigating the claims. In a statement Langdon said,

“FBI agents interviewed Andrew Manning last week. He answered questions about the statements in his affidavit, which he sent to the Justice Department in March of this year, that top allies of Gov. John Kasich offered him special influence over gubernatorial appointments if he agreed not to run for the state GOP central committee.”

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10pat(7 comments)posted 2 years, 3 months ago

Why not try something journalsts of old were taught to do, report an issue with an objective and unbiased point of view rather than the journalist's biased personal crusade? What about how OPERS has submitted proposals in the legislature to address the issues raised which have been approved by the Senate but are being stonewalled by the House? Examine and report the reforms to the public and save a retirement system rather than destroy it and do to the people who provided services to the public the same fate as the Delphi retirees.

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11theotherside(333 comments)posted 2 years, 3 months ago

The Wisconsin recall was a heavy lift for labor from the beginning. That's why there was little said from national democrats including Obama because it wasn't as much about collective bargaining as it was about recalling a sitting governor. In the final analysis, Wisconsin voters felt that Walker's actions were not misfeasance or malfeasance and not worthy of recall. The recall campaign said very little about collective bargaining. So Walker remains in office because of that reason, not because of his stripping of collective bargaining rights to public employees. To somehow transfer the recall outcome as some sort of mandate to further erode collective bargaining rights is a gamble for republican governors. One that Kasich isn't likely to embrace this close to 2014 and one that other republicans undertake at their own political peril.

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12theotherside(333 comments)posted 2 years, 3 months ago

If de Souza wants to really address an issue important to everyone, why doesn't he ask the question why retirement benefits are not available to private sector workers? They used to be, and most public employees would support such benefits for private sector workers. If private sector employers that are raking in millions in profits and their CEO's and managers are enjoying benefits that their employees don't, why isn't this being addressed instead of attacking the public systems that are by enlarge both efficient and properly managed for the benefit of their members, and stand as models for all workers, private and public, to emulate? Is it because de Souza and Vindicator would rather inflame, incite, and pit citizens against citizens? Tell me it isn't so.

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13CoupeT(3 comments)posted 2 years, 3 months ago

The attack on public workers has got to stop at some point. It's the rich and greedy that just want to pick off the middle class one by one. The steel mills, the auto industry, now public workers. I am proud to be a public worker. I am also very middle class (at best) and have to hold down a side job waiting on tables a day or two per week in addition to my 40 hour public job to make sure my kids have a bright future. I just recently narrowly missed by five minutes being in the middle of a shooting across from Taft Elementary last week. I have had knives pulled on me in my so-called "privledged position." Most public employees are educated and hard working who did what we were told growing up in order to get a job that will be stable. Here's a novel idea. If people want to save money and help the state of the union and all, how about we crack down on all the abled bodied people collecting social security and disability? How about the fact that I recently went to the doctor for a broken finger and the details on my insurance stated I was billed $567 for a doctor looking at it for all of 45 seconds? What about all the people living off of student loans knowing good and well a big portion will never pay them back (hey I actually pay mine wow)! You know, my next door neighbor works in the private sector, but previously had a stint in the public sector. To this day, she says she never worked her behind off as much as she did in her days with the public sector. Because that's what we do. And good look paying some smuck with no education, morals, and work ethic to put up with what we do on a daily basis for much less than we are already paid (which isn't all that some of you seem to think it is).

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14CoupeT(3 comments)posted 2 years, 3 months ago

oh yeah, let's not forget haven't had a raise in 4 1/2 years, but yet the cost of healthcare has steadily gone up. I swear, the upper 1% will not be happy until everyone makes $8-10 per hour and is on welfare.

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15fd6636(255 comments)posted 2 years, 3 months ago

wow Coupe!!!!!! well spoken and stated by just another " overpaid, uneducated moron" as they would like to call you. As I stated before, when "they" were "Rakin in the bucks" they laughed at you. Now that alot of those self- "entitled" out there had there bottom fall out, well, if they cant have it (pension) neither can you!!! Sounds like alot of whinning to me! Do they think that if concessions take place that there will be more money in the system? Hell no, they will steal it. Ask Kasich what he did with our pension money when he invested it with his BS firm. GONE, WITH OUT A TRACE!! So, stop. Our pension system is in tune with the ecomony, and is taking proactive measures to keep it solvent for 30 years, and our members know it so stop. Go whine about if the republijerks take control of the country, and out sorcing becomes order of the day, the pension systems will be of little discussion when there are no jobs left.

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16theotherside(333 comments)posted 2 years, 3 months ago

tc, sorry I confused you. Of course, you would need to consider the entire situation and not one that is driven by agenda to not be confused but I digress. The fact of the matter is, before the financial meltdown and recession of 2008, the public employee pension funds in the state of Ohio were managed well and were able to meet obligations. Since the recession and 2008 financial meltdown, the systems have had to request legislative reform through the adjustments I mentioned earlier in this thread to meet obligations. All without asking for additional taxpayer money. I'd say that is impressive and responsible fiduciary management. Particularly in the current financial environment. In fact, the private sector would do well to emulate this responsibility so more private sector employees could have pension benefits, but I digress again. So, management of the retirement systems has never been the problem nor is it now. The problem is with the financial meltdown (remember Lehman Bros?) and the recession and the effect that has had on the systems. Not because members receive benefits. So before you call me wrong and ridiculous, maybe you should consider the entire issue instead of what you think you know.

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17theotherside(333 comments)posted 2 years, 3 months ago

tc, I am fully aware we will never agree on this because you (and many with the same mind set, like de Souza) have an agenda to destroy public sector retirement because you have been convinced by powerful forces that public sector employees are responsible for the recession and meltdown; have something you don't have and it isn't fair; and should therefore suffer reductions in those benefits because they are unsustainable. Reductions are on the table awaiting legislative action. It is ridiculous to blame the public sector for the recession and financial meltdown (remember Wall Street and Lehman Bros?). I would agree with the notion that it isn't fair, but for different reasons. For instance, private sector employers who are currently raking in millions should be providing retirement benefits to their employees similar to public sector retirement. You claim it is too expensive. I claim it is being denied because of greed. Maybe you should be angry about that instead and be asking why that is. And as far as the public systems being built on sand and a house of cards, that is simply hyperbole. The fact of the matter is the systems continue to pay benefits and are awaiting legislative action that will maintain their ability to pay benefits (albeit reduced benefits as you and others with your mindset so desperately want) as required by the law that governs those systems. Now unless we are going to be existing in a perpetual state of recession, those systems will be able to meet their obligations. But if we are going to exist in a perpetual state of recession, we have much bigger problems in this country than just this issue anyway. That, we should be able to agree on.

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18Alexinytown(246 comments)posted 2 years, 3 months ago

Yes, Mahoning County is certainly in its own world and cut off from the rest of Ohio and the U.S.

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19theotherside(333 comments)posted 2 years, 3 months ago

tc, stability in the systems is the goal of the pending legislation in Columbus as I said. The "...debt that has riddled these systems..." as you put it is only as a result of the recent recession and financial meltdown. So like other financial institutions in the country, and the economy as a whole, the retirement systems were affected. So as the economy recovers, and reform is enacted, so should these funds. However, this statement gets to the heart of the matter "...if a 401k tanks, the owner of that tanks. If a public pension fund tanks, oh well, you still expect the same funds to be there for you. Huh?..." Private sector 401k accounts were never meant to be the sole retirement vehicle for workers. They were originally designed for wealthy business executives and the like who needed tax sheltering for high incomes. Defined benefit plans were long the vehicle of choice (along with social security) until employers decided that they could increase their profit margins by eliminating defined benefit plans so they did so and simply put everyone into 401k plans. Profit margins increased, but so did employee retirement instability and volatility. Knowing this, maybe employees need to start pressuring their employers to offer defined benefit plans instead of 401k plans. The defined benefit plan is a pool of employees contributing to the plan. The 401k plan is largely an individual employee responsibility contribution plan (maybe with matching) without pooled resources or the expertise that money managers bring to defined benefit plans. Private sector employees should be angry that their employers do not have defined benefit plans instead of demanding that public sector employees not have them either.

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20CompMan(125 comments)posted 2 years, 3 months ago

Defined benefit plans are history in the private sector and defined contribution plans (some are also 401(k)) have replaced them as self directed plans. (Read 100% control over your own monies). This will never be reversed. Besides obvious savings for companies, some who offer a match, employees are in control. For the last 15 years younger workers, who changed jobs on average of 5 to 6 times in their working careers, pushed for this change. Defined benefit plans only make sense when you work 30 plus years for 1 company - and in fact only during the last 5 to 10 years does the pension become meaningful. Changing jobs often negates (lowers) the value of a DB plan as DC plans can be transferable in full to IRS IRA's during the working career. Public plans still operate on the "nanny" plan as elected legislative people are covered by these BD plans that continue with all public sector positions during a career. It is a total conflict of interest. The same who have not addressed school funding in Ohio over the last 15 years although unconstitutional. This is not a slam on public employees. Tax payers need to select courageous leaders to address these issues and freeze new entry into a DB plan (whist protecting current DB participants). Also withhold support of tax levies forcing the issue toward resolution.

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21fd6636(255 comments)posted 2 years, 3 months ago

drone, your comments sound of utter jealosy, bro!!!

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22theotherside(333 comments)posted 2 years, 3 months ago

Comp is correct in his discussion. What he/she isn't acknowledging however is that because 401k plans and defined contribution plans are employee managed, most people have no clue how to manage those plans unless they have a thorough knowledge of how stocks, bonds, mutual funds, annuities, and the like actually work. They simply are shown a company plan that has been set up by someone on Wall Street and pretty much have to take what is offered and trust that Wall Street will do the right thing with those investments. Not a promising situation based on past Wall Street behavior. Public employee defined benefit plans are managed by financial brokers who are employed by the system board who they must answer to. They are vetted through the system board of control and if the broker isn't performing and growing the investments, he or she is held accountable by the board of control. Who controls Wall Street brokers managing 401k and defined contribution plans? Wall Street firms. Talk about conflict of interest. My suspicion is that if younger workers have pushed for the portability of 401K plans and defined contribution plans, they never really understood the differences between those plans and defined benefit plans. 401k plans were initially set up for wealthy wage earners who needed a vehicle to shelter their income from taxes. They were never intended to be used as the main retirement vehicle for the mass population but employers saw them as a way to cut costs and raise profits.

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23theotherside(333 comments)posted 2 years, 3 months ago

TC, there are no plans to combine the public sector retirement systems. At least not in the current legislation. And since you brought this up, where in the world did you hear this anyway?

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24theotherside(333 comments)posted 2 years, 3 months ago

Well tc, my very tuned in, major financial manager with a major firm has assured me that there is no talk of combining the plans.

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25theotherside(333 comments)posted 2 years, 3 months ago

And this was published in USA Today (today):


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26theotherside(333 comments)posted 2 years, 3 months ago

tc, not trying to be a smart a$$ at all. Just pointing out what my financial guy said. To be honest, I take what he says with a grain of salt. Maybe you should too.

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27DwightK(1256 comments)posted 2 years, 3 months ago

Bertram, you know that the real problem is decreased tax revenue not civil servant pay. If this area was rolling in good jobs no one would care what civil servants make. You are just stoking the class warfare flames when you make an argument like this.

Why don't you ever put the blame on the poor job situation in Ohio thanks to poor leadership in Columbus and Washington? We can't keep good teachers if we pay them with taxes that come from working at jobs that pay $8.00 per hour.

The real problem is a reduction in revenue and you know it.

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28vor2011(14 comments)posted 2 years, 3 months ago

I am so tired of listening to people who are all in the same class (The Real Middle Class - Those making 30K to 999,999K) slug it out over left over table scraps.
Lets be real about our teachers for a minute.
1. Required to earn a Master's Degree for licensure (at their own cost). What private sector job requires someone to earn a Master's out of pocket? If you want minimum wage teachers, don't require a degree!
2. The Public V. Private Sector comparison is absurd. Compare apples to apples. These statistics compare public employees, mainly degreed professionals, to anyone employed ages 18 +in any job including non-degreed, minimum wage workers.
Look at some stats on salary (careerbliss). CBS did a story on the top ten careers where a Master's pays... Public education -not in the top ten. Some salaries that are:
Computer Tech: 95K, General Manager: 97K, Financial Advisor: 78K, College Program Chair: 89K, Marketing: 98K
Managing Partner: 139K, Data Administrator: 96K, Business Manager: 80K
These salaries are entry level not averages and do not include lavish benefit packages, and bonuses that accompany these jobs.
The average salary for educators is in the 50's. Why are we mad at teachers, who help our children and police officers and fire fighters who help us? The answer is simple..
The media has moved on from reporting unbiased coverage of events and issues to influence and advancing propaganda.
Who should middle class Ohioians be angry with:
The Governor:
1. Refused to live in the Governor's mansion costing tax payers a million to fortify his home and provide up keep to two properties.
2 Promotes charter schools regardless of success so their private sector owners can profiteer at the cost of the under-education of children.
State Law Makers:
3. The Ohio Supreme Court ruled that the funding formula for schools is unconstitutional multiple times but it has not changed.
4. Local funds, voted for by levy voters in districts is given to schools outside of those same districts for charter/community school education.
5. Local budgets have been cut drastically by state law makers while state level budgets remain the same or increase.
6. Lottery money given to a school district is earmarked for a specific purpose, then the state deducts that same amount from general fund revenue - who benefits - the state!
7. State lawmakers have not taken a paycut and make 65K + committee money and get benefits for life for working two days a week (when in session). One Cincinatti Senator, the same woman who proposed SB5, told reporters she would not seek congress at the fed level because she likes being able to put her kids on the bus Tuesday morning, and be home to get them off Thursday afternoon - something working as a state senator allows.

Seriously, come on people. Quit arguing with eachother and lets start getting more upset with the right people. Wake up!

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29southsidedave(4780 comments)posted 2 years, 3 months ago

I read all the comments and agree that there is no easy or quick fix to the problems; yet, public employees deserve to receive their pensions the same as anyone else and have their benefits reduced in mid-stream!

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30lmk10pta(4 comments)posted 2 years, 2 months ago

I just cancelled my subscription to the Vindy. I think we all should. deSouza needs to see what unemployment is like, and quit belittling people because of the job they have. Public employees work damn hard at their jobs and earn every cent. Anyone has the choice to stay at the job they are lucky to have. I'm done reading the crap the Vindy reports and writes on. We definitely need a newspaper/reporter that isn't so one-sided.
I also think that if all these politicians lived in and maintained their own homes, drove their own cars, had the same benefits and retirement packages as we the citizen does, there would be a lot of savings and less complaining.
Why are they better than anyone else?

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