In an rare act of bipartisanship, Re- publicans and Democrats in the Ohio General Assembly have approved a package of bills that should improve the financial health of the five public pension funds and keep them solvent.
While most Ohioans will not be affected by what the legislators did last week, they can take comfort in the fact that no taxpayer dollars will be used to prop up the funds. The insolvency of public pension systems has become a national epidemic, and in many states lawmakers have opted to deal with the crisis by tapping into their operating funds.
In Ohio, Republican legislators, who took control of the House and retained control of the Senate in the 2010 election, made it clear no taxpayer dollars would be used to plug the holes. The conservative think tank, The Buckeye Institute for Public Policy Solutions, issued a report that placed the total unfunded government pension liabilities at $66 billion. While that figure has been open to debate, pension fund managers and others acknowledged during legislative hearings that adjustments to benefits, premiums and eligibility requirements were necessary.
A study by Pension Trustee Advisors and KMS Actuaries commissioned by House Speaker William G. Batchelder, R-Medina, confirmed that reforms were needed and that the changes adopted in May by the Senate were necessary.
The pension funds’ difficulties are the result of a rise in the cost of health care, an increase in the number of retirees, and a lackluster return on investments.
The changes contained in the five bills will result in adjustments to benefits, premiums and eligibility requirements, including in some cases the age and service levels at which participants will be eligible to retire.
Allowances for cost-of-living fluctuations and the way the salary average for determining benefits is calculated are among other areas where the bills makes adjustments.
Two years ago, the Cleveland Plain Dealer reported that the amount of tax money spent on public pensions in Ohio and guaranteeing retirement payments for government workers increased by nearly a third since 2004.
The paper pegged the cost of supporting the pension funds for state and local government workers at $3.5 billion. That figure is expected to rise in the coming years when more baby boomers retire.
Median pension
Government retirees in Ohio earned a median pension of $21,804, according to an analysis by the Plain Dealer. The average for private sector workers, including Social Security, was $18,390.
Ohio’s public pension systems have generally required workers to contribute 10 percent of their salaries to the funds. Taxpayers contribute between 14 percent and 25 percent, the newspaper reported.
The rest of the funds’ revenue comes from investment earnings.
The changes that are in the offing for the five public pension funds will affect nearly 1.8 million workers, retirees and family members and in some cases the worker’s contribution rate will go up.
GOP leaders in the General Assembly have said they intend to deal with other aspects of the public pension system next year, such as double-dipping by employees. They should also address the issue of public employers (by extension, the taxpayers) picking up the employees’ share of pension contributions. Having any government entity pay 100 percent is unacceptable.
Comments
wow how the numbers change. When KASICK was pushing BS5 their were only 350,00 public workers. Now that number jumped to 1.8 million which I kept saying form day one!!!!!!!!!!
Read it again idiot, 1.8 million workers , retirees and family members combined. Typical repuglicans.
When are Kasich and his Kronies going to reduce their own compensation and retirement? Yes, yes, before the zealots start screaming, the amount of money is insignificant. The action of accepting his/their portion of the sacrifice they demand from all the OTHER public employees, is far from insignificant.
"They should also address the issue of public employers (by extension, the taxpayers) picking up the employees’ share of pension contributions. Having any government entity pay 100 percent is unacceptable."
This should have been already addressed. THE MAJORITY OF JOBS THAT ARE BEING PAID 100% ARE THE ADMINISTRATIVE JOBS. You should have been clear when you wrote that. Those jobs are MAYORS, CITY COUNCIL JOBS, CHIEFS, COMMISSIONERS, PRINCIPALS, ECT. Top level management is what I'm saying. When these people retire, and the public hears about their packages, they go crazy thinking all public workers get this. NOT TRUE.
Why wasn't this addressed? The average worker now has to contribute more, pay more in health costs, has to retire later, ect. why do we not address the people making the biggest money?
You're absolutely correct, YoungstownBornRaised. Most of the abuses are at the TOP, the administrators, managers, superintendents, etc. By the way, these of course are people NOT REPRESENTED BY A UNION. These abuses need to end. But there are some places still where pensions are being picked up 100%, like in Mahoning County and this is not right. All public workers should have to contribute 10% of salary toward their retirement. Also, all the double dipping needs to stop.
Grand4dad, what double-dipping are you talking about? The one where someone works two jobs and pays into two different retirement systems, "double-dipping" when they retire?
But you and YoungstownBornRaised are right - the media plays up the big shots' retirement and purposefully makes it sound as if it's a typical rank-and-file retirement.
NoBS, I'm referring to double dipping as in the cae of school superintendents retiring, collecting pension, then getting rehired a few days later into the same position with the same employer at a lower salary. The argument is that is saves the taxpayer money. Goes on in many other public jobs too, cities, counties, universities, etc.
Gdad is dead on. The Boardman news ran a story about actions taken recently by the Boardman school board. Part of that concerned rehiring several teachers who had retired. At a,time when it is so hard for young people to find jobs this is a terrible greedy practice.