The Buckeye Institute offers its thoughts on what fundamental pension reform should look like as the House of Representatives holds hearings on a package of bills aimed at addressing underfunding in the five state pensions.
One of the typical roadblocks erected to block fundamental public pension reform in Ohio is the dreaded notion of "transition costs" or the costs associated with the closing of the traditional defined-benefit (DB) plans to new workers while shifting those new workers into defined contribution plans. Essentially, supporters of the status quo argue that the state will be unable to afford their current obligations if new employees aren't paying into the DB plans. This Policy Brief shows that these arguments may be less persuasive than meets the eye given that the actual amortization of the liabilities is a completely separate issue from actual reforms of the pension systems themselves.
This is the testimony offered by the Buckeye Institute to the State Senate panel overseeing pension reform legislation. In it, the Buckeye Institute argues that the need for fundamental reform is the only way to permanently resolve the potential for taxpayers being "on the hook" for a possible bailout of the public pensions should the economy hit a rough patch that greatly reduces their rate of return.
The Buckeye Institute responds to several points raised by various public pension funds against our recent "Hanging by a Thread" report that detailed the precarious financial position of Ohio's public pension system.
Cumulatively, Ohio's public pension funds are only 67 percent funded, meaning they only have 67 cents of assets for every $1 of liabilities. Three out of the five pension systems, under current law, will never be able to pay off their liabilities under sound actuarial practice. While there are numerous reasons for the financial challenges each of these public pension funds faces, the single largest is the very structure of old-school defined-benefit pensions with benefits that far exceed the average retirement benefits for a worker in the private sector. This report argues that it is essential that a shift occur towards defined-contribution plans that more closely track how retirements are funded in the private sector, otherwise, taxpayers may well be asked to pony up the bill if investment returns for the funds fail to meet expectations.
This is a brief case study showing how the reform of public worker compensation in the city of Reynoldsburg could play a key role in avoiding the need for additional taxes while also avoiding layoffs and cuts to programs that voters have come to expect.
The Buckeye Institute responds to the State Teachers' Retirement System on several points raised by STRS with respect to our previous report on taxpayer contribution rates for government workers.
This report illustrates that Ohio's public entity matching rate to its public pensions outpaces the national averages of other states. In essence, this report shows that Ohio's public pensions are far more generous than those offered not only in the private sector, but more generous than those offered by public entities in many other states.
This brief chart explains exactly how serious the fiscal crisis is for Central Ohio school districts. Cumulatively, the Central Ohio school districts are projecting a nearly $1 billion deficit by 2015. 96 percent of their budgets are being swallowed up by compensation costs, showing how difficult it will be to gain budget sanity in the absence of compensation and collective bargaining reform.
Several easy charts that show that Ohio's private sector has been taking it on the chin since 2000 while government has emerged largely unscathed. They also show the difference in compensation for the annual total costs of public vs. private sector workers, including insurance and pensions contributions, in Ohio over the next 30 years
This quick document has been used by the Buckeye Institute during multiple public speaking engagements and is a convenient, easy to ready piece that shows the dire state of Ohio's economy over the last two decades and some of the key policy areas where changes must be made in order to enhance Ohio's competitiveness.
The Buckeye Institute's testimony before the Ohio Retirement Study Council regarding the need for fundamental pension reform as opposed to small-scale changes.
This Policy Brief outlines several common myths being perpetuated by public sector unions seeking to derail this much needed collective bargaining reforms. Highlights include debunking the notion that real change can occur under the current collective bargaining framework in Ohio and debunking the notion that Big Labor has ever offered any substantive ideas on reforms to make collective bargaining more effective in Ohio.
This Policy Brief outlines several common myths being perpetuated by public sector unions seeking to derail this much needed collective bargaining reforms. Highlights include debunking the idea that cuts made in the biennial budget are primarily responsible for the structural problems in the budgets of countless local government bodies throughout Ohio and the idea that police and fire safety personnel will be put in harm's way as a result of the reforms contained in Senate Bill 5.
This Policy Brief uses the "Michigan Model" to examine how much Ohio could save over the next 30 years if the state began shifting employees into defined-contribution plans as opposed to the current default defined-benefit plans.
The Buckeye Institute's response to an attack effort buy the union backed Economic Policy Institute regarding the compensation of public employees in Ohio vs. compensation of average private sector workers in Ohio.
A Final Word on the DROP Program and our Report
Response to the Ohio Police & Fire Pension Fund regarding Dipped in Gold
Dipped in Gold: Upper-Management Police and Fire Retirees become Public-Service Millionaires