The Columbus Dispatch...
Editorial: Meet in the middle
Pensions need outside review, but that’s no reason to delay change
Friday, June 24, 2011

 State legislators and heads of Ohio’s five public-employee pension systems are having a needless argument. Lawmakers say an independent consultant should review the pension plans to ensure that planned changes will make them fiscally sound, and the pension officials, who oppose the review, say they shouldn’t have to wait for a study to make needed changes to the plans. 

The solution is simple: The Ohio Retirement Study Council should go forward with an independent study, which the council estimates could be finished by the end of the year. But that doesn’t mean the pension systems’ reform proposals, which they put forth almost two years ago, have to stay on the shelf. 

The council began calling for an independent review after Gov. John Kasich’s proposed budget included a provision to increase the amount public employees pay toward their pensions by 2 percent and decrease taxpayer contributions by a like amount. It’s a worthy idea that could help ease all government budgets; Ohio school districts alone would save $230 million. 

But the pension plans raised a wrinkle: Having more of the pension fund coming directly from employees could affect its fiscal health. That’s because, when workers leave their public jobs before retirement and withdraw from the pension plans, they’re entitled to take with them the money they contributed. If they contribute more, they’ll take more when they go, and that could leave pension plans underfunded. 

Citing that fact, leaders of the pension plans opposed the 2 percent shift and pointed to their own reform proposals, which call variously for raising retirement ages, requiring employees to contribute more toward their pensions, adjusting the way the pension payout is calculated and other changes that would make the pension plans more fiscally sound. 

Bills that would enact those proposals are idling in the House and Senate. Pension leaders urged lawmakers to enact them and skip Kasich’s 2-percent measure. 

That’s when the Retirement Study Council called for an independent actuarial review of all reform proposals. Pension leaders oppose this idea, saying it will duplicate their efforts and waste time and money. 

But independent review would be valuable, and a study needn’t be a drawn-out affair. Meanwhile, lawmakers should move forward with the plans’ reform proposals, even as the review is carried out. 

The proposed changes clearly would do nothing to make the plans less solvent; they would make them stronger as the review is conducted. 

If the independent review shows that further changes are required or, less likely, that some of the changes were unnecessary, the legislature can make additional changes. In fact, the council should commission such reviews regularly, to keep the pension funds in optimum health as economic conditions change. 

Read it at the Columbus Dispatch