By now, you have no doubt heard Kasich’s talking point about public employee pensions. The Better Ohio website states “Issue 2 simply says government employees should pay their required share (10 percent) and taxpayers will contribute the employer share (14 percent).” They are hammering this home lately as though it is the greatest idea they have ever had and no one had ever thought of it until now.
We simply say that those who are selling Issue 2 on the premise that it is needed to reform state pension funds are completely (100 percent) ignorant.
Issue 2 opponents are quick to counter Kasich’s talking point by saying if the 10%/14% reform was the only thing Senate Bill 5 was about, it would probably have been worked out in less than a month, but to be fair, that isn’t entirely correct either. You see, the State Teachers Retirement Board had actually been working on reforming their fund since September 1, 2009, over two years ago!
In fact, some of you may remember that when Senate Bill 5 was introduced on February 1, many public employees were supporting even HIGHER numbers to reform the pension funds. Lost in the SB5 fiasco was House Bill 69, introduced by ultra-conservative Representative Lynn Wachtmann, that was intended to reform the state pension funds and was being supported, with some relatively minor and friendly amendments, by the State Teachers Retirement Board. On Feb. 16, Michael Nehf, executive director of STRS Ohio, and Terri Bierdeman, director of Governmental Relations for STRS Ohio, presented testimony in support of House Bill 69. They were recommending amendments that would better align with the Board’s January plan so that House Bill 69 would make the necessary financial corrections to keep the fund solvent. They were, in effect, making HB69 MORE effective financially, not less.
And how does this make Kasich and Issue 2 supporters ignorant?
On September 1, 2009 (over two years ago), the STRS announced a plan to reform the pension fund to maintain it’s long-term solvency. From the 9/1/2009 STRS Board News:
Currently [over two years ago], STRS Ohio members pay 10% of their salary to STRS Ohio and employers pay 14% of total teacher payroll in lieu of paying into Social Security.
At that time, STRS was recommending that contributions by increased so that members would ultimately contribute 12.5% and employers would contribute 16.5%, phasing that in over the next 10 years (by 2020). The Board News explains why this change was necessary:
Before the market downturn, STRS Ohio had a funding period of 41.2 years, exceeding state statute’s 30-year maximum funding period….The unprecedented decline in the global markets and the accompanying recession, along with the projected gradual economic recovery, significantly accelerated the need for STRS Ohio to make changes. Without these changes, STRS Ohio would eventually be unable to pay future benefits.
Why, you might ask, doesn’t the STRS Board just make these changes? The Board News conveniently explains that, too:
The proposed changes require legislative action by the Ohio General Assembly and the governor, as all the requested changes require changes in existing statute.
That is, STRS is governed by state laws and requires the legislature to act to make these changes. And they tried. And a Republican tried, as a matter of fact. Lynn Wachtmann proposed House Bill 69 on the EXACT SAME DAY as Senate Bill 5, and the bill was assigned to his subcommittee, the House Health and Aging Subcommittee on Retirement and Pensions. House Bill 69 was scuttled, however, when Senate Bill 5 was rolled out with its own conflicting figures. House Bill 69 now sits dormant, unable to fix Ohio’s public pension funds due to Kasich’s partisan union-busting bill.
So, instead of FIXING the State Teachers Retirement System and funding it properly, as the TEACHERS recommended over two years ago, Kasich is trumpeting his “necessary” legislation that will drive the STRS fund into a hole that would mean teachers will not receive their future benefits. Teachers want to fix their fund by contributing more, Kasich is preventing that from occurring.
So, Kasich’s 10% and 14%? Just like SB5, those figures destroy teachers. If this was really about financial reform, Kasich would be trumpeting House Bill 69 and the bipartisan efforts to pass the legislation to repair the pension funds after the recession.
Instead, Kasich has caused teachers to lose another year of reforming their retirement fund to a level of sustainability that they themselves identified over two years ago, causing the pension fund to become even further out of necessary alignment, creating the very financial problem that he is blaming on teachers, creating the alleged need for his reform package. A self-fulfilling prophecy, of sorts.
So that 10%/14% that Issue 2 supporters are trumpeting as the solution? Ignorance.
Teachers tried to pay more than 10%/14% starting over two years ago and again on February 1 of this year.
But instead of choosing REAL pension reform, Kasich chose Senate Bill 5.
Vote NO on Issue 2!
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