Kasich and other supporters of Senate Bill 5/Issue 2 claim that it gives local communities the tools they need to control costs. They like to use the banning of pension pick-ups as an example, primarily because this is one of the few parts of the bill that tends to poll well.

Politifact does a good job of describing pension pick-ups:

Many public workers contribute 10 percent of their salary toward their pension while the employer contributes 14 percent of the a worker’s salary. Some unions, however, have negotiated deals where the employer pays a portion of the employee contribution. If an employer agreed to pay 2 percent of the worker share, for example, it would pay 16 percent of the worker’s salary and the worker would pay 8 percent.

Senate Bill 5 prohibits the practice, known as a “pension pick-up.”

Here’s the thing about pension pick-ups though: management tends to like this option while unions often don’t.

That’s because pension pick-ups provide managers an alternative to salary increases, which can add additional costs to already tight budgets. Paying an employee more in salary means the medicare contribution goes up along with the unemployment insurance costs. Picking up a portion of an employee’s pension doesn’t have this impact and can actually end up costing the employer less. In other words, pension-pickups are a useful tool used by local communities to help control their costs.

The Chillicothe Gazette highlighted some local examples in which mayors and local finance directors were happy and thankful to have the option to trade pension pick-ups for increased wages.

When one’s salary increases, so does everything else that is attached to salary. For the employer, that is unemployment insurance, Medicare and the employer’s pension contribution. For the employee, it’s Medicare, taxes and their pension contribution.

“If we had not done that (given a pension pickup), wages would have increased, and that could have hurt our bottom line,” said Dale Raines, budget and finance director for the city of Zanesville, which pays pickups for its unions. “So it’s kind of a wash.”

Employees still pocket more money. Though the base pay is the same, less is withheld from each paycheck.

It also might lead to a smaller pension down the line — if a wage increase was sacrificed, the final average salary and monthly pension check will be less. This is why the Ohio Education Association would prefer that, if given a choice, its union members take a raise instead of a pickup.

“It’s not something we encourage because it’s done in lieu of wage hike, and a wage hike would count toward final compensation,” said William Leibensperger, vice president of the Ohio OEA.

Mayor Joe Sulzer said some of the pickup was negotiated years ago, and additional pickup was given in recent years as a way to avoid costly salary increases.

“In a way, it’s cheaper than pay raises, because … the more they get paid, the more we have to pay into their pension,” Sulzer said.

He said when the city decided to agree to union negotiating strategies asking the city to pick up a portion of the employee share, they looked over the cost savings with City Auditor Bill Morrissey.

“We made the decision based on figures of savings provided by the auditor,” Sulzer said. “And when they retire, they get the same benefits as everyone else.”

Kasich and SB5’s other supporters claim the would-be-law offers local communities more options. They claim it gives local officials more tools to help manage their costs. And in their ads they tout the elimination of pension pick-ups as of their primary examples.

But many local officials – people who actually bargain with unions on behalf of these local communities – seem to think that pension pick-ups are actually important and useful when bargaining with public employee unions. Pension pick-ups are a tool that can often save local communities money.

And yet SB5 outright bans cities from using pension pick-ups as a way to control their costs.

Kasich claims SB5 provides local communities tools to control their costs when it actually takes many of these tools away, tying the hands of local officials, limiting their options and hurting their ability to control costs as they see fit.

 
  • seditious

    I don’t disagree with your article, Joseph. But here’s one thing that neither party is talking about which would help control costs—–why not put all public employees into the Medicare system? The city of Columbus spends well over $100 million a year to for-profit health insurance companies for premiums for city employees.  I support health care for everyone including our public employees but taxpayers should stop being gouged to pay for insurance policies for public employees.

  • John

    I don’t understnd your post.  Medicare only is available if one is 65.  I suppose there are some 65 and older government workers that continue to take regular health insurance, waiting until they retire to sign up for Medicare. So they could go on Medicare and use their employee insurance as a ‘Medigap’ policy (this is what the public employee retirement systems do). Presumably this would save the governments some money, but only for the oldest of employees. 

  • Annekarina

    And if the socalled private schools offered better health care?

  • Anonymous

    Presumably, there will be no pension pick ups OR wage increases.  Love logging into this site every day to discover what new atrocities John Kasich is perpetrating on Ohio citizens.

  • Anonymous

    These are the type of real world facts you just can not seem to get into the head of the pro-SB5 crowd.  

    Just like the point that public unions all over the state have already taken extreme measure to save their city’s money (furlough days, wage freezes, wage reductions etc) I mean they just do not want to hear it. If you tell them that, provide actual examples, they still spout off the tea party talking points… it’s frustrating.

  • How does shifting costs from local and state levels to the federal level help much?

  • eraser1998

    Public employees ARE in the Medicare system.

     

  • I worked many different jobs. 2 of them were with a grocery store chain and a small factory. BOTH offered GOOD  insurance health dental and vision. I never paid a Dime for either one. One I was a cashier and the other was a machine operator. Oh ya and they both paid into a pension for me. I could contribute to them or not. It was up to me. I never did. But both companies did. Tax payers are not being gouged! Why am I not working at either of these jobs anymore? One I quite to have my babies, the other I quite to go back to school because I am just not a do the same old same old min. after min. hour after hour day after day year after year, being chained to a machine where I could not use my brain and talents.

  • i It helps about as much as moving cost from the state levels to the local levels like our good friends in Columbus are doing. Give those with less resources a bigger portion to pay for and take care. That seems to be the way Columbus wants it. They also want us to be at war with each other so they can slip things in that effects us all with out us noticing.

  • 66hdrider

    In addition to Medicare, I also pay in to social security through FICA tax deductions. Funny thing is, as a public employee, I am not eligible to collect social security. Am I to assume that I am being gouged into paying for private sector retirees?

  • Rescueinc1

    IDIOT! We do pay for YOUR medicare….yours and ALL the other bitchy PRIVATE sector employees! and WE ARE NOT ELIGIBLE FOR IT!!! MORON…..stop the lies! NO on issue 2

  • Anonymous

    Hope everybody is on board.
    We are literally in a war of ideas for the future of Ohio.
    Never let any stupid assertion by the other side go unanswered.
    The BS they are spewing about teachers is nothing short of outrageousness.
    We can win this fight only if we do fight back!

  • Anonymous

    “If you tell them that, provide actual examples, they still spout off the tea party talking points…”

    That’s because they’re stupid, narrow-minded sheeple.

    Bah!

Looking for something?

Use the form below to search the site:


Still not finding what you're looking for? Drop a comment on a post or contact us so we can take care of it!