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Pension reform fight has makings of a war

System isn’t sustainable without some changes

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By Laura A. Bischoff, Staff Writer Updated 1:39 PM Monday, January 4, 2010

COLUMBUS — Like it or not, lawmakers will be asked this year to overhaul the state’s public pension systems that serve 1.7 million Ohioans and cost local governments more than $4 billion a year.

It’ll be an epic struggle among powerful interest groups to determine how the burden of shoring up the pension systems is shared.

Teachers, cops and firefighters may be asked to work longer. Retirees will likely face higher medical costs. And taxpayers may be asked to chip in as much as $5 billion toward the pension systems, if lawmakers accept proposed increases from two of the state’s five public pension funds.

The Ohio Police & Fire Pension Fund and State Teachers Retirement System are asking for rate increases that, over the next five years alone, would cost local governments hundreds of millions of dollars.

State Sen. Kirk Schuring, R-Canton, described the viability of making taxpayers shell out more through higher employer contributions as “highly unlikely, probably impossible,” given the economic slump and the financial struggles local governments already face.

Still, some change is inevitable. Thanks to market losses, skyrocketing health care costs and baby boomer retirees living longer, nobody thinks the current system is sustainable without changes. The market has rebounded some, but investment portfolios from the five pension systems lost a staggering $56.6 billion in 2008.

“This isn’t just putting a new coat of paint on the house” said Ken Thomas, a city of Dayton employee who chairs the Ohio Public Employees Retirement System board, which is proposing adding two years to the eligibility age for a full pension for its members. “This is re-doing the foundation.”

None of the proposed changes, however, call for following the private sector into 401(k)-type plans that might ease the burden on local governments and schools.

“The goal should be to continue the defined-benefit plan,” said state Rep. Todd Book, a Portsmouth Democrat who chairs the Ohio Retirement Study Council.

Opposition to raising employer contribution rates already has begun to surface. In Springboro, where multiple levy defeats have forced the district to close a school, cut back on busing routes, lay off workers and boost participation fees for extracurricular activities, the proposal is about as welcome as an H1N1 outbreak.

“The community already feels we compensate every employee in our school system wonderfully,” said Kelly Kohls, who was elected to the school board in November. “We’ve been very generous.”

Anthony Gottschlich of the Dayton Daily News and James Nash of the Columbus Dispatch contributed to this report.

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