A in the Dayton Daily News alludes to the pension reform in Ohio slowing down to a snail's pace due to efforts to have outside analysis done on the pension systems' plans for reform. Let's hope this isn't true. There are reforms that can be undertaken that will solve our pension problems and avoid future taxpayer funded bailouts.
However, there is no need to sit back and wait before exploring the types of reforms that will really deal with the long-term problems associated with
The Daily News story quotes ORSC Chair State Senator Keith Faber (R- Celina),
While the pension funds dispute the term "ponzi scheme," there is more than a kernel of truth to calling them exactly that.
As long as pensions are funded in this way, there will always be the chance that taxpayers will end up on the hook as pensions become underfunded through poor planning, political malfeasance or bad economic circumstances.
The pensions will say this is an apocalyptic scenario that has never happened and is unlikely to happen.
That is not true. It has happened already in a sense. The pension funds have already increases the employer, in other words the taxpayer, contribution from 11 percent to 14 percent. While there had already been built in statutory authority for an up to 14 percent match, thus not requiring a legislative change, this does not alter the practical reality that taxpayers are paying more for every single state worker than they used to.
That may not exactly qualify as a bailout, but it is certainly traveling a pretty similar path.
Also, it has to be pointed out that the best-funded pension, OPERS, admits that they are only funded at the 78 percent or so level. By definition that is not "fully funded" even if it technically actuarially sound.
Finally, the pensions keep assuming an 8 percent return on investment. While there likely would be years where that happens, or is somewhat exceeded, with all of the national and international economic turmoil, it seems a bit on the pollyannaish side.
The bottom line is that changing the pension system towards a 401(k) like system will eventually eliminate this prospect. The private sector has already done this in large measure. From a public policy perspective, it makes little sense why the public sector remains unwilling to change. Then again, when a particular benefit on offer is particularly good, few willingly choose to lose it.
For all these reasons Sen. Faber is on the money when it comes to reform. So here's to hoping that things aren't just relegated to the backburner because of an outside study.