Pensions continued on A11
By Lynn Hulsey
Staff Writer
A Dayton Daily News investigation into abuse of disability pensions awarded by state public pension systems shows reforms are needed, said state Sen. Shannon Jones.
She and other legislators said problems with the way disability pensions are awarded must be addressed, most likely by amending Senate Bill 3, the pending pension reform bill.
“It seems to be that based on your good investigation that we need to broaden the scope,” said Jones, R-Springboro.
“I was surprised by the volume of specific cases that were reported in your article. We weren’t talking about isolated incidences,” Jones said. “I’m currently looking into the matter to look at what kind of policy changes we might make in this area.”
On June 12 the Dayton Daily News published stories showing that Ohio’s public pension system is so open for abuse that it allows public employees to retire on disability pensions after committing crimes while in office and while being disciplined or terminated for misconduct on the job.
The investigation found:
• High rates of disability retirements in some local jurisdictions, and particularly among members of the Ohio Police and Fire Pension Fund and the law enforcement division of the Ohio Public Employees Retirement Fund.
• More than a dozen examples of local public employees, mostly public safety workers, who had been awarded disability pensions despite facing serious disciplinary action or criminal charges.
• The pension systems do not ask for or require that disability applicants reveal that a medical claim has been turned down by the Ohio Bureau of Workers’ Compensation or that they are in trouble at work or with the law.
• More than 40,000 people — about 12 percent of all Ohio public employee retirees – were receiving disability pensions last year at a cost to the pension systems of more than $1 billion annually, not including health care costs.
• Disability retirees are allowed to work other jobs with no offset of pension payments.
• The state’s five public pension funds vary widely in how strict they are in investigating possible fraud and in terminating disability benefits.
• OP&F does not alert employers that a member has applied for or been approved to receive a disability pension unless the member chooses to accept the pension, allowing police and firefighters who decide the pension amount awarded isn’t enough to retire on to return to work even though the pension board says they are too disabled to do the job.
“The story raises issues of concern for all taxpayers,” said state Sen. Bill Beagle, R-Tipp City. “More investigating needs to be done because there appears to be abuse.”
In defense of the system
Pension fund officials say they follow state law and that disability applicants must prove their claim to medical experts and pension system officials. Pension officials say problems on the job are not relevant to a medical determination of disability and that the funds are not permitted, except by court order, to withhold a pension due to criminal conviction.
“Your exhaustive report on police and fire disability benefits contained many, many words, but said very little,” William Estabrook, OP&F executive director, said in a June 15 letter to the editor responding to the newspaper’s findings. “The articles’ targets seemed to further expose or embarrass certain individuals rather than present a thorough and clear understanding of disability determinations.”
He accused the newspaper of “printing conjecture or innuendo” rather than facts.
Estabrook said the pension fund is “diligent” in examining disability applicants.
A 1996 law provides for pension benefits to be used for payment of restitution for certain crimes in office, but it wasn’t until 2008 that the law allowed for court-ordered forfeiture of a portion of pension benefits for certain crimes committed in office by a limited number of higher ranking public officials.
Offenses covered include bribery, corrupt activity and some, but not all, theft in office charges. In April the law was expanded to public employees with control over the expenditure of $100,000 and allows court-ordered termination of disability benefits when the retiree’s disabling condition arise out of the criminal offense.
“Just because you do something wrong doesn’t mean you shouldn’t be eligible for disability,” said Rep. Clayton Luckie, D-Dayton, one of three Ohio House members who in April voted against a workers’ compensation bill that included the public pension forfeiture provisions.
“They’re not taking funds they did not earn. They have paid into the system and all they’re doing is going back and getting what is rightfully theirs,” he said. “I don’t think they’re walking in there with no proof.”
Luckie said he’s afraid that tightening the system too much will deprive deserving retirees and their families of disability benefits.
Jones, Beagle and Sen. Keith Faber, R-Celina, said failure to curtail abuse of the pension system will hurt deserving retirees.
“Don’t make any mistake: the fact that you have disproportionately high disability costs is one factor that will cause there to be an increase in contribution costs or a decrease in benefits for people who are playing by the rules,” said Faber, sponsor of Senate Bill 3 and chairman of the Senate Government Reform and Oversight Committee considering pension reform.
That bill mirrors proposed reforms suggested by each of the five pension systems, which together provide pensions and health benefits to 1.1 million active members, retirees and dependents at an annual cost of more than $13 billion. The reforms are designed to financially strengthen the systems as they cope with the rising cost of pensions and health care and big losses in investments during the economic recession.
OPERS supported strengthening the forfeiture law, and is the only one of the five plans that has proposed directly reforming the disability pension system. OPERS spokeswoman Julie Graham-Price said the Dayton Daily News story should have included more about those proposals.
“Because we adhere to state statutes, we cannot implement these changes on our own,” said Karen A. Carraher, interim executive director of OPERS, in a June 15 letter to the editor. “By law, we have no authority to judge an applicant’s motivation, only whether medical professionals believe he or she is unable to perform current job duties.”
Under the OPERS proposal, disability retirees would be annually evaluated for continued eligibility after they’ve spent three years on disability to see if they could work in “any occupation,” rather than the current standard of whether they can work in their “own occupation,” said Graham-Price.
“The major goal is to recognize that many of our disabled members eventually can be gainfully employed in other jobs,” she said.
Researching the problems
Legislators said they want to research the problems before recommending specific changes to pension laws, including disability rules, and will hire an actuary to assist them in the process.
“Certainly there needs to be something that addresses the valid concerns that you’ve raised,” said Faber. “It’s more important that we do this right than do this fast.”
Matt Mayer, president of the conservative Buckeye Institute for Public Policy Solutions in Columbus, said the legislature needs to “distance itself from entrenched interests that want to keep the status quo.”
“I think we have to have real reform,” said Mayer. “Ohioans deserve transparency and accountability in the systems. The pension folks need to stop hiding behind the laws they put in place.”
Contact this reporter at (937) 225-7455 or lhulsey@DaytonDailyNews.com.