So the Dispatch has a story about how Kasich’s “Jobs” budget is running into the Law of Unintended Consequences. For example, Kasich’s budget calls for 2% of employer pension contributions to be shifted over to employees. How does this create jobs? Kasich doesn’t even offer an explanation. It just helps Kasich balance the budget by, again, simply mandating that someone else pick up the State’s spending.
Anyway, the pensions have a requirement that they can pay off their obligations within thirty years. If not, they have to make adjustments to their contributions and/or benefits, which, after the battering the Lehman Brothers-inspired collapse on Wall Street has done, they all just did.
And now, Governor Kasich’s “Jobs” Budget shift of the pension contributions throws that out of whack. Why is that? Well, the Dispatch reported on Friday that the Administration hadn’t considered at all whether the change would impact the solvency of the pension funds. To them, they thought such a change would only impact how much the employee contributed to what the employer contributed. But the Dispatch explains why that doesn’t work:
That’s because when employees leave the government payroll before they are vested, they are entitled to receive their share of the pension payments but not the government’s share. Since the employees’ share would now be higher, the share that they would be withdrawing also would be higher.
Today, the Dispatch reports that the PERS, STRS, and Ohio Police & Fire Pension funds all project that Kasich’s budget change would put the pensions out of compliance with Ohio’s statutory requirement that they be able to pay their obligations within thirty years. Kasich’s budget change is particularly hard on police and firefighters because their contribution share will be the most affected by Kasich’s budget change as the budget change actually mandates that the employee share equals the employer share. Police and fire have the largest employer shares because the years of service in that field before retirement is drastically below other fields for obvious reasons.
This is what led Kasich spokesman Rob Nichols to call the end of furloughs “a raise” on Friday. Kasich’s solution isn’t to rethink the budget proposal. According to Friday’s Dispatch, it just means a new round of lower benefits while employees pay more. As far as the Kasich Administration is concerned, problem solved.
In other news, the Dispatch has this little buried nugget:
The PERS calculation includes one additional year because of an assumption that 5,000 state- and local-government workers would lose their jobs under Kasich’s budget.
Shouldn’t a fiscally conservative budget render pension funds more solvent, not less?
And shouldn’t a “Jobs” Budget be predicted to create jobs, not cost 5,000?
John Kasich’s “Jobs” Budget isn’t “getting the jobs done.“