http://www.businessweek.com/ap/2012-09-13/public-pension-changes-clear-ohio-legislature

AP News

Public pension changes clear Ohio Legislature


COLUMBUS, Ohio (AP) — A package of bills aimed at shoring up Ohio's five public pension funds with increased contributions among some workers and higher retirement ages cleared the state Legislature on Wednesday in a rare showing of bipartisanship during an election year.

The legislation will affect almost 1.8 million Ohioans who are covered by the five funds: Ohio Public Employee Retirement System, State Teachers Retirement System, School Employees Retirement System, Ohio Highway Patrol Retirement System and the Ohio Police and Fire Pension Fund.

Republican Gov. John Kasich will sign the package into law, his office said.

Ohio's pension funds are in danger of becoming insolvent if adjustments aren't made. Policymakers, retiree groups, government employers and others have wrestled over the fixes for four years.

The pension bills include requests by the funds to raise premiums, lower payouts and tighten eligibility requirements for affected teachers, police and other public workers.

After becoming law, the measures would take effect Jan. 7. Employee contribution rates would be gradually increased by increments from 10 percent of salary to 12.25 percent for those belonging to the Ohio Police and Fire Pension Fund, and from 10 percent to 14 percent for members of the State Teachers Retirement System.

Members of OPERS and the School Employees Retirement System would not see an increase in contributions. The Ohio Highway Patrol Retirement System board could adjust member contributions from 10 percent to up to 14 percent of salary.

Republican Rep. Kirk Schuring, chairman of a legislative subcommittee that has been studying the pensions' fiscal health, called the bills the "most significant reform measures" in decades.

Schuring said that while some may view the changes as painful, they will help preserve benefits for current and future retirees.

Republican Senate President Tom Niehaus and Senate Democratic Leader Eric Kearney co-sponsored the bills, which passed the Senate in May.

The package had been awaiting House action since the spring. House Speaker William Batchelder, a Republican, had held the bills in committee over the summer as an analysis commissioned by the nonpartisan Ohio Retirement Study Council was completed. The review ultimately suggested a handful of changes but generally endorsed the bills.

The House made mostly minor tweaks to the bills and passed them with almost unanimous support. The Senate then agreed to the changes in unanimous votes on each measure.

Batchelder said one of the things that attracts people to public service is the state's pension system. He noted current and future retirees and beneficiaries have an increased awareness of the challenges that other states have faced in ensuring pension obligations are met.

"As people read the paper and watch TV, they see these funds blowing up," Batchelder said. "And that will not happen in Ohio."

Accounting and performance audits of the five funds found that without adjustments to account for longer life spans, an influx of retirement-age baby boomers and economic challenges faced by government employers, the funds' long-term solvency over the next 30 years would be at risk.

The funds told state lawmakers they were losing varying amounts, including one estimate of $1 million a day, as they awaited legislative action allowing them to adjust premiums and payments for retirees and other recommended changes.

Lawmakers return, ed to the Statehouse on Wednesday to tackle the pension fund changes after they had been on break for much of the summer. Leaders said they don't expect to come back to Columbus until after the November election.


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