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StakeholderPresentationMarch 1-12.pdf

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Dear Member,

A proposal to shift some pension contributions from public employers to employees was left out of the biennial budget that Ohio Gov. John Kasich signed on June 30.

Absent in the final document, which went into effect July 1, was a proposal to require Ohio public employees to contribute an additional 2 percent to their pension obligation and decrease the employers' contribution by 2 percent. The Ohio Public Employees Retirement System would like to thank everyone who helped us in this process by contacting your legislators and supporting our position in other ways.

Ohio Public Employees Retirement System Interim Executive Director Karen Carraher twice testified against the rate shift because it would:

• significantly increase our unfunded liabilities;
• extend the time to pay off those liabilities beyond what is required by law;
• impact health-care funding, which was one of the reasons that our Board of Trustees recommended plan design changes in November 2009.

We are studying the budget to understand its potential impact on the pension system. While the budget did not allow privatization of the Ohio Lottery, it included a proposal to lease the Ohio Turnpike (subject to approval by the Ohio General Assembly), as well as sell or lease several state prisons. Our actuary has determined that for every 5,000 public jobs that are lost to privatization, we add one year to our unfunded liabilities.

The next step for us is to continue to educate that meaningful and timely pension redesign is necessary.

The Ohio Retirement Study Council has approved a Request for Proposal (RFP) to hire a third-party actuarial consultant to study the proposals of all five public pension systems in preparation for a pension redesign bill. While we support transparency and a review of our Board's proposals, we have provided the ORSC with suggestions to help sharpen the focus of the study and minimize any duplication of effort. We will work with the council going forward to assist it in this process.

The 2 percent-contribution shift language could come up again as legislators consider the components of pension redesign, so we will keep you updated as matters progress.

In the meantime, thank you again for your support and advocacy on behalf of the Ohio Public Employees Retirement System.

Summary CAFR published

OPERS has published a Summary Annual Financial Report, designed to relay in plain language key financial information contained in our Comprehensive Annual Financial Report (CAFR). You can find the summary report on our website by clicking on this link.

On Tuesday, Feb. 1, during floor sessions of both the Ohio House of Representatives and the Ohio Senate, Republican legislators submitted bills that would seek to amend Ohio's public pension systems. Sen. President Pro Tempore Keith Fabor (R-Celina) and Rep. Lynn Wachtmann (R-Napoleon) submitted Senate Bill 3 and House Bill 69, respectfully, as both chambers' attempt to assure the long-term viability of the state's five pension systems. 

While both S.B. 3 and H.B. 69 call for amendments to the Ohio Revised Code that seek to make changes to the rules governing the five state retirement systems, they vastly differ in their current status.  Fabor's S.B. 3 is intended only to be a placeholder bill, pending the submission of an additional substitute bill that will map out the Senate's package of reforms to the pension systems. In yesterday's Hannah News Report, Senate President Tom Niehaus (R-New Richmond) encouraged quick submission of the Substitute Senate Bill 3, stating that, "...acting on the pension reform measure should come 'sooner than later' because of the implication for the funds' solvency." A substitute bill is expected to be submitted within the next few weeks. 

As opposed to the one-paragraph S.B. 3, the House version, H.B. 69, lays out 271 pages of amendments aimed at addressing the issue of pension system solvency. As anticipated, the House version of pension reform is a carbon copy of the proposed changes approved by the five pension boards and the Ohio Retirement Study Council (ORSC) during the 128th General Assembly. A copy of the ORSC-approved pension system changes can be accessed by clicking here.   

In announcing the Jan. 26, 2011 submission of H.B. 3 during the House Committee on Health and Aging (of which Rep. Wachtmann chairs), Wachtmann hinted at the intent of H.B 69 as the starting point for pension reform, with concerns not addressed by the ORSC-approved changes added as amendments through the committee process. Among these were leveling the employee and employer contribution rate to the same percentage, addressing double dipping, and streamlining the purchasing and back office operations of the pension systems through system collaboration. H.B. 69 is currently in the Retirements and Pensions Sub-Committee of the House Committee on Health and Aging; the Sub-Committee is chaired by Rep. Kirk Schuring (R-Canton). There are no current hearing dates set for the Retirements and Pensions Sub-Committee.

Remember: Political action taken on these issues is made possible by member contributions to COPE/PAC. 

Toledo Blade:

Highlights of Proposed Reforms to the Ohio Public Employees Retirement System (1 million members)

• Set minimum retirement age for full benefits for general members at 55 if they have at least 32 years of service or age 67 after putting five years in. Currently, an employee can retire with full benefits at any age after 30 years on the job or at 65 once they've surpassed five years. This would be phased in based on how close employees are to retiring.
  
• Raise minimum retirement age for full benefits by two years for sheriffs and other law enforcement members to 50 with 25 years of service or 64 with 15 years.
  
• Raise minimum retirement age for full benefits for court bailiffs and other public safety members by two years to 54 with 25 years of service or 64 with 15 years.
  
• Tie cost-of-living adjustments to federal inflation index capped at 3 percent compared to current flat rate of 3 percent. Current retirees would remain at flat rate.
  
• Calculate benefits based on average salary over five years instead of three.

COLUMBUS -- Ohio's five public retirement funds came to lawmakers Wednesday with proposals to raise member contributions and cut benefits in an effort to ensure their long-term viability.Full article