COLUMBUS — Legislation to reduce benefits for Ohio’s largest public retirement system has run into fierce opposition from retirees, and even the state representative sponsoring the bill says he’s skeptical about the plan.
“I have concerns about it,” said Rep. Gary Scherer, R-Circleville. “In order to move ahead — if it is to move ahead — will require changes.”
Scherer introduced House Bill 413 to implement recommendations by the Ohio Public Employees Retirement System — or OPERS — aimed to shore up the $90 billion fund.
The plan would reduce annual cost-of-living adjustments from a fixed 3 percent to the percentage increase in the Consumer Price Index, subject to a 2.5 percent cap. The change is expected to reduce the system’s unfunded liabilities by $4 billion.
Sherer said he is sympathetic to concerns from retirees who say they based their decision when to retire on the expectation of receiving a certain amount in benefits. He said the proposed cut on top of recent reductions in health-care benefits would create additional hardship for retirees.
“We have to stop the bleeding,” Sherer said.
Both Republicans and Democrats on a House committee reviewing the bill have expressed similar concerns.
Like many retirees, David Benjamin, a retired public attorney from Aurora, said he closely calculated his benefits with cost-of-living adjustments before deciding to retire. The bill, if approved, would affect decisions that he and other retirees cannot go back and change.
“Many of us kept serving the public because of the legislated promise of a secure retirement,” Benjamin told the House Aging & Long Term Care Committee during a recent hearing. “You are being asked to break that legislated promise on consultants’ suggestions, which I believe are at best unconvincing.”
Geoff Hetrick, president of Public Employee Retirees Inc., said the cuts are not needed and that OPERS is one of the most financially stable systems in the country.
“There is no crisis looming,” Hetrick said.
“OPERS has made the decision that it is better to make an already-strong system catastrophe-proof than to protect the financial security of 200,000 of its most vulnerable members — retirees.”
Eric Lehnhart, a special agent for the Ohio Bureau of Criminal Investigation and a representative for the Fraternal Order of Police, also argued that the changes are unnecessary and harmful.
“Many of our retirees believed the current COLA (Cost of Living Adjustment) was installed to help offset inflation and the significant changes to their health care,” Lehnhart said.
“Retirees made the decision to retire based on the information they received from OPERS. Those counseling sessions instilled confidence in members that they were making the right financial choices for their family for years to come.”
OPERS Executive Director Karen Carraher told lawmakers that the fund is indeed in a strong financial position, with 2017 returns expected to exceed 16 percent, making it an ideal time to eliminate $19 billion in unfunded liability.
“While those who oppose our efforts would prefer we wait for a financial crisis, OPERS does not manage by crisis. We have never proposed changes without careful evaluation … and have always taken the financially responsible path, even when it’s not necessarily the easy one.”
Carraher also reminded legislators that OPERS is no longer putting money into its retiree health-care plan. That fund has $12 billion, enough to remain solvent for an estimated 12 years.
“We have made it clear to our retirees that we cannot consider funding health care until the pension funding is stronger,” she said.
Sherer said he’s eager to hear from the Ohio Retirement Study Council, which evaluates such proposals to determine their potential impact.
It won’t be coming soon.
The 14-member council has yet to respond to a request made by its staff in November, asking for guidelines for its review of the plan. In fact, the council has not held a monthly meeting since and has none scheduled.
Council Chairman Rep. Kirk Schuring, R-Canton, could not be reached for comment.
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