Ohio taxpayers asked to cover rising pension costs
COLUMBUS (AP) — Ohio’s public pensions are turning to taxpayers to make up for shortfalls in the money they have to pay for guaranteed benefits for government employees, irking some taxpayers who have watched comparable benefits disappear in the private sector.
The State Teachers Retirement System and the Ohio Police & Fire Pension Fund are currently unable to meet a requirement that they have enough funds to cover pension obligations for 30 years.
They are asking every type of local government to contribute more to the funds, which would mean more taxes or reduced services in other areas.
The additional money would add $400 million to the size of the state’s pension funds, which now stands at $4.1 billion.
An analysis by The Columbus Dispatch published Sunday found the bill for taxpayers could top $5 billion a year roughly five years from now.
While most private workers’ retirement prospects depend on the success of the stock market, government employee pensions are guaranteed. Government pensions for the longest serving employees top out at 88 percent of their pay, while private employers have moved away from defined-benefit plans.
In 1974, 71 percent of private retirement funds came through defined-benefit plans, but that number dropped to 24 percent by 2008, according to the nonpartisan Employee Benefit Research Institute.
Some taxpayers wonder why government benefits haven’t changed in unison with the private market, where 401(k) plans have become a prominent stock-market reliant retirement plan.
“I think it’s ridiculous,” said Larry Rausch, 71, of Lancaster, who worked in sales for Sears until 1998. “I don’t know how they can expect guys like me to pay their retirement.”
But many government leaders defend the defined-benefit plans for government employees.
“The goal should be to continue the defined-benefit plan,” said state Rep. Todd Book, a Portsmouth Democrat and leader 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.”
The requests to require local governments to pay more into the teachers and fire and police pensions must go before state lawmakers early this year, and they may get a cool reception.
“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 î all of them î are compared to private-sector retirement plans,” said Rep. Lynn Wachtmann, a Napoleon Republican who sits on the retirement panel.
“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.”
The idea of converting the state’s pension funds into a 401(k)-type system has not been formally discussed on the panel, but Tom Ash, a lobbyist for the Buckeye Association of School Administrators, said it’s being talked about behind the scenes.
Those who receive the defined-benefit plans view that kind of change as a nonstarter.