Tuesday, March 15, 2011


Today, Governor Kasich unveils his 2012/13 biennium budget.

One of the daunting tasks of state Representative Kirk Schuring (Republican - Jackson Township - 51st House District) as well as his fellows in the Ohio General Assembly (OGA)  and, of course, newly elected Republican Governor John Kasich is to close an $8 billion gap in the 2012/13 biennium Ohio state government budget.

The OGA is about to trim not only Ohio's budget but also - by indirection - local government budgets in a number of ways, to wit:
  • eliminate Ohio's estate tax which goes 80% to Ohio's villages, cities and townships beginning with 2013,
  • cut money from the Ohio budgeted Local Government Fund (started in 1983 to get the support of Ohioans for the Ohio income tax) anywhere from 15% to 50%,
  • not fully replace revenues lost to local governments from the 2005 began phase-out of Ohio tangible personal property tax,
  • and, perhaps, cut the reimbursement to counties of 12-1/2% (10% rollback and 2-1/2% discount to owner occupied taxed residences), and, finally,
  • implement a "means test" to those who now qualify for the homestead tax exemption.
To the degree that state government takes away state monies flowing to local government, it enhances its own revenue stream (except, of course, for the estate tax which obviously will also at the remaining 20% rate be lost to state government).

Even if Ohio's legislature enacts only part of the list set forth above, the state's villages, cities, townships, counties and other political subdivisions' will be financially stressed - to put it mildly.

An anemic way that state government endeavors to help the financial picture of local government is to trim local government's obligation to make pension contributions to its employees' retirement to the Ohio Public Employees Retirement System (OPERS) by curtailing the numbers of employees eligible to participate in the state pension plan.

The SCPR became alerted to the state initiative to change the eligibility standard for  participation in OPERS via a presentation of Trustee Lee Laubacher (Democrat - Perry Township [Stark County]) at the Stark County Township Association monthly meeting held at the Hartville Kitchen (Lake Township) on February 17th.

Laubacher's presentation can be viewed in a video that can be accessed at the end of this blog.

The focus of this particular blog is on pension costs to Ohio's townships and to provide an account of how negatively affected township elected officials are marshaling lobbying forces (i.e. through the Ohio Township Association) to fight the change.

To the degree that township trustees and fiscal officers are permitted to participate in the Public Employment Retirement System (PERS), the burden of the employer contributions (boards of township trustees) is, of course, a tax burden which partially falls upon township taxpayers.

Apparently, seeing this, state Representative Lynn Wachtmann has introduced House Bill 69 to raise the bar for political subdivision officials to qualify for participation in PERS.  If the bill is not changed at the behest of the Ohio Trustees Association and other public official lobbying groups, post-enactment of the legislation - only those who are paid $1,000.00 or more per month will be eligible to be part of PERS.  Under current law, a political subdivision employee only has to earn $250 per month to be eligible to participate.

Further narrowing the SCPR's examination of the impact of the projected change to trustees and fiscal officers, how many would the current version of HB 69 take off of local taxpayer support in terms of pension benefits?  About 4,400 by The Report's calculation, if one uses the figure of 1100 townships that would be affected by bill as presented by Trustee Laubacher.

The roughly 4,400 are about 85% of trustees/fiscal officers that staff the approximate total of 1,300 (plus a few) township halls that populate the state of Ohio.  There may be other township employees caught up in this change, however, again readers are reminded that the focus of this blog is on "elected" township employees.

Laubacher and his like (serving in Ohio's largest townships - about 200 or so in number which would equal about 800 elected officials) would continue to qualify for pension benefits post-HB 69.  In Stark County, trustees and fiscal officers from Jackson, Lake, Perry and Plain would be qualified to participate (at partial taxpayer expense - see chart above) in PERS whereas those same officials in townships in which the monthly remuneration is less than $1,000 monthly (remuneration is set by Ohio statutory law) would not.

A number of Stark County's "large township" trustees (and fiscal officers) apparently will be "double dipping" or, alternatively, qualify for a "lump-sum payout" including taxpayer contributions from one or more of Ohio's five state retirement systems.  In some cases, the effect will be to hike the base period income (from two different jobs, but the same plan) and thereby increase the pension payout with the taxpayers paying into the plan for both the primary and secondary job.

Take Laubacher himself and his connection to the pension factor.   Here is his bio from the Perry Township website:

Note that he is already a beneficiary of STRS (the "State Teachers Retirement System").

Other elected township officials - certainly across Ohio - and presumably in Stark County are similarly situated as Laubacher.

While the SCPR understands that "double-dippers" or "lump-sum qualifiers" have earned their benefits as provided by Ohio law, The Report believes it is time to tighten up eligibility criteria such as proposed in HB 69 to lessen the opportunity - at taxpayer expense - for enhanced benefits.

Many taxpayers have little or nothing in the way of pension/retirement benefits.  To ask them to embellish the retirement benefits of those who have already qualified for a state of Ohio pension is a bit much.

The Report endorses HB 69 as far as it goes as a way to help the financial solvency of local government and to create a reasonable standard upon which to lessen the opportunity of those already on pension or on a clear path to achieving a taxpayer supported pension/retirement benefit from further burdening taxpayers. 

However, more work does need to be done on the bill to take away the different treatment of trustees/fiscal officers of larger township over and above the smaller townships.

The day and age for taxpayers helping to fund second and third pensions for more or less part-time public employees, whether elected or not, and whether from large or small townships, should be put to an end!

No comments: