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Columbus
Dispatch…
Kasich looks to
extract savings from pensions
The hits keep coming for public workers who may have to pay more into
their retirement
By Jim Siegel
Thursday, March 17, 2011 03:07 AM
Public workers in Ohio who already were worried about weakened
collective-bargaining powers now have a new paycheck-related concern:
Gov. John Kasich wants all of them to pay more for their pensions.
State Budget Director Tim Keen said the shift would cost state- and
local-government workers - and, in turn, save state and local
governments - $1.1 billion over the biennium. More than $1 billion of
that would come from the local level, he said.
Local governments and schools are taking significant cuts in Kasich's
proposed two-year, $55.5 billion budget. To help handle the reductions,
which add up to about $640million for local governments and $1.3
billion for schools, Kasich wants to shift more of the burden of
pension payments to the workers.
Under his plan, all state and local public workers would see an extra
2percent of their paychecks go toward their pension plans, and the
government employers' contribution would decrease by 2 percent.
"This will go a long way toward allowing state and local employers to
deal with the circumstances we face," Keen told the House Finance
Committee yesterday as legislative hearings began on the budget Kasich
unveiled Tuesday.
Senate President Tom Niehaus, R-New Richmond, said he agrees with the
idea: "It keeps the public employee obligations in line with what most
Ohioans are doing on their own in the private sector."
But police, firefighters and teachers could see even more than a 2
percent pay reduction. The impact of the budget proposal could be
compounded by efforts of the state's five pension systems to restore
fiscal health to their battered funds, already slated to cost workers
billions in coming decades.
The State Teachers Retirement System already has proposed increasing
employee contributions from 10 percent to 13 percent by 2014, a $300
million annual hit on teachers' paychecks. For police and firefighters,
the proposed increase is 2.25 percent through 2014, a total reduction
of $509 million.
That means teachers could end up at a 15 percent contribution level -
half again what they're paying now. Safety forces would be right
behind, at 14.25 percent.
"For those systems that have already recommended a tier increase in
employee responsibility to their system, that may be the biggest
challenge politically," said Rep. Lynn R. Wachtmann, R-Napoleon, who is
sponsoring the pension overhaul bill. "How high is the legislature
willing to go?"
For public workers already worried about how their pay levels might
change under Senate Bill 5, the Republican collective-bargaining
overhaul, the latest proposed hit to the wallet was not welcome news.
"Gov. Kasich is touting that he is creating flexibility, but all the
flexibility is at the sacrifice of employees in this state," said Sue
Taylor, president of the Ohio Federation of Teachers.
Virtually all state and local public workers currently pay 10 percent
of their salaries toward their pensions, and government employers pay
at least 14 percent. For many workers, that would shift to a 12-12
split.
The 2 percentage-point shift would also apply to those whose employers
currently pay more toward employee pensions - 19.5 percent for police,
24 percent for firefighters and 26.5 percent for the Highway Patrol.
Some Republican lawmakers have raised questions about the current
pension split, noting that Social Security payments in the private
sector are paid evenly by the employee and employer. But if both the
budget and pension changes are enacted, that balance would tip toward
the employer.
"It creates challenges, but we'll manage it," Wachtmann said.
"Philosophically I've always thought that those of us in public
employment, such as myself, should pay more of our responsibility to
the pension. I may see if we can pull that out of the budget and put it
in the pension-reform bill, so we can have it all in one bill."
Keen said the budget language and Wachtmann's House Bill 69 would have
to be reconciled.
"The purpose of this change is to provide some savings to the locals
and provide a comparable structure to the private sector," Keen said.
But Taylor wondered: "How does this create jobs? It takes more money
out of more people's pockets that they can't spend in their local
communities."
This is another blow to public workers who are already facing potential
layoffs as a result of cuts and restructuring in Kasich's budget.
Republicans also are pushing a significant overhaul of Ohio's
collective-bargaining law, which has already passed the Senate and is
expected to be approved by the House before the end of the month.
Read it at the Columbus Dispatch
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