On June 19, Governor Strickland outlined several proposed cuts to government programs and services to help fix a $3.2 billion shortfall in House Bill 1-the state operating budget for fiscal years 2010-2011. While I want to work with the Governor and my colleagues in the General Assembly to ensure we pass a balanced budget without raising taxes on Ohio families, I have serious concerns about his plan to reduce the portion of employee salaries that the state contributes to the Ohio Public Employee Retirement System (OPERS) from 14 percent to 8 percent for the next two years. The administration claims they will pay it back over a decade as state revenues get better.
The recession has already reduced the size of Ohio's pension funds significantly, and the Governor's plan would not only further strain OPERS' ability to offer health care benefits to current retirees, but could impact the availability of benefits for the thousands of other public employees who continue to pay into the system with the hope of a secure retirement.
The Governor's proposal also raises several other important concerns. While the Strickland administration says they will pay OPERS back over the next decade, many members of the General Assembly, and even the Governor himself, will not be in office in 10 years. Would future legislatures be obligated to refund the money?
In addition, would the state be required to refund interest and lost investment earnings on the diverted payments? The Governor estimates that by lowering the state's contribution to OPERS over the next two years, it would free up $256 million to help balance the budget. If, hypothetically, the pension fund was earning 5 percent interest each year during that time, OPERS could potentially lose an additional $25.6 million over the biennium to help pay retiree benefits.
Finally, why is the Governor targeting OPERS for extra funds and not the state's other pension systems?
Aside from the tremendous impact the Governor's proposal could have on the availability of health care and pension benefits for current retirees, as well as the long-term solvency of the OPERS fund, this borrowing is bad for the future financial stability of the state, as it just puts off tough decisions about revenue problems to another day.
I will work diligently in the coming days to address these concerns and do all I can to protect retirement benefits for the thousands of dedicated public employees across the state.
Jimmy Stewart (R) is a State Senator representing the 20th district of Ohio.
4 Opinion
