1 Million Ohio Public Employees Face Pension Cuts As Another Ponzi Teeters On The Brink

We've written frequently of late about the pension crisis in Kentucky where pensioners are facing potentially catastrophic benefit cuts as their politicians finally admit that they've been sold a fantasy for decades (see: Pension Consultant Offers Dire Outlook For Kentucky: Freeze Pension And Slash Benefits Or Else).

Unfortunately, Kentucky is not unique as there is a never-ending stream of similar pension failures popping up daily all around the country.  The latest such example comes to us from Ohio as the Dayton Daily News notes that the Ohio Public Employees Retirement System (OPERS) has been forced to consider COLA cuts for its 1 million pensioners in order to keep the fund solvent.

Ohio’s biggest public pension system is considering cutting the cost of living allowances for its 1-million members as a way to shore up the long-term finances of the fund.

 

Ohio Public Employees Retirement System trustees on Wednesday discussed options that could affect all current and future retirees, including tying the cost of living allowance to inflation and capping it and delaying the onset of the COLA for new retirees.

 

No decision has been made and trustees will discuss the options again in October. So far, some 72,000 members responded to an OPERS survey about possible changes. OPERS spokesman Todd Hutchins said 70 percent of retirees responding to the survey report that they prefer that the COLA be capped, rather than frozen.

So how bad is OPERS?  Per the latest valuation, Ohio taxpayers are on the hook for a roughly $20 billion underfunding.  Ironically, the fund ended 2016 with the highest underfunding in it's history, after being nearly fully funded in 2007, despite a 275% surge in the S&P off the lows in 2009.  Perhaps someone can explain to us how these pensions stand a chance of ever again being fully funded if they can't even manage to improve their balance sheet during one of the biggest equity bubbles in history?

 

Be that as it may, like all pensions the OPERS underfunding is only as good as the garbage assumptions used to calculate it.  As the following table shows, a mere 1% reduction in OPERS' discount rate would result in a $12 billion increase in the fund's net liability.

 

Ironically, even OPERS' own financial report pegs its "Weighted Average Long-Term Expected Real Rate of Return" at just 5.66%.

 

Not surprisingly, OPERS is just one of many Ohio public pensions currently facing cuts.

OPERS is the latest of the five public pensions systems in Ohio to consider benefit cuts.

 

The State Teachers Retirement System of Ohio in April voted to indefinitely suspend the COLA for retired teachers. Trustees said they weren’t certain that the cut would be enough to shore up the finances of the $72-billion fund.

 

Ohio Police & Fire Pension Fund is expected to hire a consultant to help restructure its health care benefits. OP&F announced in May it would switch in January 2019 to issuing stipends to each retiree, who can then use the money to purchase coverage.

 

School Employees Retirement System, which covers janitors, bus drivers and cafeteria workers, is taking steps to link its cost of living allowance to inflation, cap it at 2.5 percent, and delay its onset for new retirees.

Meanwhile, by protesting earlier this week Ohio employees demonstrated that they're still in the "Shock and Denial" phase of dealing with the news that their pensions were always just a clever little fairy tale told to earn their votes.  Luckily, "Anger and Bargaining" is only 2 steps away in the 7-step process...

Comments

Mazzy Mazzy Thu, 09/21/2017 - 19:28 Permalink

There are so many turds in our country mooching in so many different ways.  The few productive people left around are being chipped away at from all sides, from corporate turds at the top and lazy loser turds at the bottom, and perhaps we're being chipped away at from the flanks too by these "middle class" public "workers" who have never had to hussle or produce anything of value nor have they ever had to risk missing a mortgage payment or not being able to afford healthcare or put food on the table.When is Atlas going to Shrug?

In reply to by Mazzy

Creepy_Azz_Crackaah Mazzy Thu, 09/21/2017 - 19:38 Permalink

Some of those people in the video sure aren't having issues being able to buy a lot of food. The money can't be that bad.

Imagine what the U.S. (Fed/state/local) would be like with limited, small, gubmint. Less strangulation/regulation of businesses/people. More jobs. Less hassle. More freedom. And many people hate this concept.

In reply to by Mazzy

Delphi_Addiction Creepy_Azz_Crackaah Fri, 09/22/2017 - 00:04 Permalink

.gov is a jobs program. It's a refugee for the otherwise unemployable. If it shrank, we'd experience 30% unemployment.

I'm not defending it by any stretch, but I presume TPTB knows that's it's more welfare program than needed public service. The thinking is at least these people get up each morning and go somewhere. That knowledge is what separates the limo liberal from the neo liberal, who hasn't learned the math to understand the economic of serfdom.

Otherwise, they exist to consume, operate the matrix, and feed the beast.

In reply to by Creepy_Azz_Crackaah

1033eruth Mazzy Thu, 09/21/2017 - 21:48 Permalink

That's a good question but the answer is there.  Its called Ponzi retirees.  If you're in LE, you work 20 and can retire, double dip and have TWO pensions from government and then because we're living longer, you can draw retirement for 20 - 30 years which is why the retirees keep piling up.  Also, of those million a certain percnetage are dead, but the spouse just accidentally forgot to tell somebody.  

In reply to by Mazzy

Cluster_Frak Thu, 09/21/2017 - 19:30 Permalink

The day the goverment eats their own will be a beatiful day. it's like cancer feeding on itself since the host body can no longer sustain the cancer spread.

dot.dot adr Thu, 09/21/2017 - 20:27 Permalink

Yep.  And all the skools have 'resource officers' who sit around all day long and surf their facebooks.Most have no idea how many people, besides cops, are employed in 'Justice System'.  Umpteen probation offficers, pretrial officers, court investigators, prosecutors, asst prosecutors, victim advocates, drug couselors, correction officers etc. etc.  The whole thing is mind-blowing.  Each one is covered by OPERS.

In reply to by adr

RovingGrokster Thu, 09/21/2017 - 19:41 Permalink

Ahh the protests, and the public union arm-twisting. keep on demanding that 100% of promised benefits be preserved as a "right" - no adjustments to face reality permitted, UNTIL the pot is empty - then their benefits will be 100% ........ o NOTHING!!

BingoBoggins RovingGrokster Fri, 09/22/2017 - 03:05 Permalink

What upsets me is their gullibility, marked by the sheer hatred,  all instilled by the Business Agents  and Organizers - had one say it ws the Bush Doctrine's fault - only you learn later the values of certain assets are overstated by half again and more. Non-standard assets, put together in the Executive Board meetings with no other oversight. Like that Real Estate hustle in the Dallas cops fund.

In reply to by RovingGrokster

Thethingreenline Thu, 09/21/2017 - 19:47 Permalink

Zero Hedge keeps its consecutive daily streak intact!
Bashing the pensions,
Bashing the pensions,
Bashing the pensions,
TTGL still getting Illinois pension and not cut.
This is all propaganda to make the country think money is not there, when in fact most funds are intact and very viable. Yes , maybe small assessments need to be instituted to shore up some of the accounts, but this is the exception.
The pension bashers (from here forward to be abbreviated PBS) have an agenda, trolls basically who want to divide.
As for Ohio, 1 million pensioners didn't sling sh** for 25 years to be ripped off by greedy bankers, Wall Street shysters and special interests.

TTGL

FredFlintstone Thethingreenline Thu, 09/21/2017 - 21:43 Permalink

Ohio STRS staff work in the Tal Mahal of buildings with ridiculously expensive furniture systems. Overpaid and under worked just like their cleint base, the teachers themselves. Money down a rat hole. At one time they would cash out their $30k in sick time to "spike" their pay on retirement as it is based on an average of their last 3 years of employment. They would count their time as student employees ehen they were at state college in the formula. When they thought they had infinite money they were real generous with themselves and their kind. Fukem. Some of the most mediocre of humans retiring in their early 50's and then sucking off the system for the next 35 to 40 years.

In reply to by Thethingreenline

RedBaron616 Omen IV Fri, 09/22/2017 - 00:38 Permalink

Yes, everyone is willing to put up with the crap that goes on in government offices for 30+ years just to get nothing at the end.From your grammar, I would say you are a waste of public education. I'll laugh my butt off when your Social Security check bounces. But no doubt YOU think YOU DESERVE that, don't you?

In reply to by Omen IV

BingoBoggins Thethingreenline Fri, 09/22/2017 - 02:55 Permalink

So, those downvotes represent the number of consecutive days?  These people are more courteous than you think.I'll give you an up vote for your passion. Consider your conviction, however. What is there to back it? Firm numbers in a set of books? Which set is that? Have you ever considered that maybe all is not what it seems? Does my allegation come off as preposterous as yours - TTGL is above reproach. neither of us are making false claims, actually. We just don't prove them in our commentary shorthand. We would consider them fallacious for that.And get mad, and yell at each other ...aug 17There they go again: Bashing the pensions, Bashing the pensions, Bashing the pensions. Gobels said, tell a lie often enough and it becomes real. They keep telling everyone the pensions are unsound so they don't have to pay them! Can't people see the con? TTGL slung shit for 25 years and deserves the pension. TTGL made concessions on other benefits and they need to hold up their part of the bargain!! If needed, bail out the pensions like they bailed out the banks. TTGLWhich union did you belong to, TTGL? Did they slam every day? A double down expert like you. Reminds me of playin' some sandlot pick up ball with an ex-Terp linebacker. he was a coke freak beside the roids. Dislocated my shoulder. he still couldn't tackle me.

In reply to by Thethingreenline