Police, firefighters want pension fund boosts
The Ohio Police & Fire Pension Fund is asking lawmakers to boost how much local governments pay into cops and firefighters’ retirement system – a move that could cost those communities hundreds of millions of dollars.
The fund is backing proposed legislation that would increase local governments’ rates to 26.5% of payroll for cops and firefighters, up from the current rates of 19.5% and 24%, respectively. The hike would be passed onto taxpayers.
An estimate for how much that would cost Ohio’s 900 local police and fire departments was not immediately available. The departments contributed $518.2 million on $2.74 billion in payroll in 2020, according to the fund’s most recent comprehensive financial report.
“I think that the employers, mayors, etc, understand the essential nature of recruiting and retaining public safety officers – not just through COVID but we’ve had a lot of social unrest,” fund director Mary Beth Foley said. “So we need them and they need a defined benefit plan that they can rely upon. They need disability benefits to be
ensured.”
The employer contribution was last increased in 1986.
“We are going to the Legislature with a problem clearly on the horizon with a fair solution that will allow us to avoid difficult decisions driven by ignoring the issue until it's too late,” said Michael Taylor, president of the Ohio Association of Professional Fire Fighters.
He added, “Employers should pay their fair share and the time to act is now while local governments are in a strong financial position.”
Cities' finances are already in a tight spot. Many municipalities risk losing millions of dollars in income tax revenues as more workers continue to work from home, Ohio Municipal League executive director Kent Scarrett said.
“The financial stability of municipalities is far from rosy,” he said.
Foley said the goal is to move the bill, which has yet to be introduced, through the House and Senate by December 2022.
Over the past eight years, employee contribution rates increased by 2.25% to 12.25% and retirees have been forced to pay more for health benefits.
Foley also noted that she expects an actuarial study due next year will show the fund should further lower its annual assumed rate of return. Currently, the system expects to average an 8% return on its $18 billion in assets. The 8% rate is the highest among Ohio's retirement funds.
Ohio's five public pension systems serve 675,000 government employees, 1.1 million inactive members and 485,000 beneficiaries. Collectively, the five systems have more than $250 billion in investment assets.
The systems are funded by employer and employee contributions and investment returns. Public employees in Ohio do not participate in Social Security. Benefits and retirement rules are largely set by state law.
Laura Bischoff is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch and 20 other news organizations.