COLA Bill Has First Hearing in Aging and Long Term Care Committee

COLA Issue Update from PERI
November 22, 2017
House Committee Holds Second Hearing on COLA Reduction Bill
December 14, 2017

COLA Bill Has First Hearing in Aging and Long Term Care Committee

(December 7, 2017)  Yesterday the House Committee on Aging and Long Term Care heard sponsor testimony on HB 413, the bill to reduce retirees’ COLA from a fixed 3% to actual inflation up to 2.5%.  PERI was at the hearing and listened as the bill sponsor, Rep. Gary Scherer, told lawmakers this is the beginning of the conversation.  We asked Rep. Scherer last week to give us some assurance the bill would not be rushed through the General Assembly in the last weeks of 2017.  We believe any piece of legislation that has such an important impact on retirees must be carefully considered and Rep. Scherer agreed with us.  We look forward to the opportunity to present testimony in full opposition to HB 413 later on this winter.  PERI would like to thank PERI members from Central Ohio who took time to attend the hearing yesterday and help us fill the room.  Committee members were aware that many retirees were listening to their remarks.

The House of Representatives will soon recess for the remainder of the year and not return until January.  Our objective is to use this time to continue our meetings with legislators and work toward a resolution that would hold retirees harmless and retain the current fixed 3% COLA.  We remain optimistic that we can resolve this issue with members of the General Assembly.  PERI will continue to keep you posted on developments as debate on HB 413 continues into 2018.

Geoff Hetrick

President & CEO, Public Employee Retirees, Inc.

25 Comments

  1. Ginny says:

    Thanks for the update. As you noted, there is strength in numbers as members of PERI attended this meeting and gave you support. As you continue to meet with legislators to assure that retirees are held harmless with regards to the 3% COLA, other members of PERI who can’t attend meetings need to have a way to communicate their dissatisfaction with OPERS trying to change what was promised to them when they retired. PERI members need and want to be involved in whatever manner their circumstances allow. If we can’t travel, we can write letters. If we can’t write letters or emails, we can call. Please, PERI give us some direction NOW so we can help.

  2. Rick says:

    how do we volunteer to attend a future meeting, after all, we are retired, in other words
    Put me in coach, Im ready to play , today

  3. Daniel says:

    I also would like to volunteer to attend future meetings .Thank you PERI for your hard work it’s good to know us retirees have someone working to protect us . I agree with the strength in numbers – our group is made up of a lot of voters! We have families who vote too. Whatever the outcome we must remember who helped us and who hurt us when Election Day comes.

    • Rick says:

      Exactly, I have 3 married children and two grandchildren of voting age, that’s 9 for this retiree. Our family’s at least are on our side.

  4. Jim says:

    Any legislation must prevent OPERS administration and investment staff from profiting from any reduction in liabilities made possible by our sacrifices. Also, they should be barred from profiting by surpassing their ever lowered assumptions. A return of 8% has been used for years. Now they want to only assume a 7.5% rate of return. If they keep getting 10% or better their raises should be huge. Sounds like a scam.

  5. David says:

    Thanks PERI for your advocacy. In the newsletter I received from OPERS today they said they hope to introduce legislation within the next few weeks re COLA. At a minimum I hope PERI can block any attempt by legislators to make changes before legal counsel has a chance to look at this.
    Dave

  6. Dean says:

    Thank you for the timely update.

  7. JERRY M. says:

    Thanks to P.E.R.I. for standing up for retirees! All retirees need to do what they can to fight Opers and to fight H.B. 413!

  8. JERRY M. says:

    This one point needs to be included in the debate, Opers administration and investment staff must be prevented from receiving pay raises and bonuses from any retiree sacrifices. When retirees attend the Opers speaks seminars, This point needs to be raised. I am sure P.E.R.I. will raise this issue as the debate in the general assembly continues.

  9. Tracy says:

    What is no one looking at increasing the numbers of years neeed to retire for future retirees instead of cutting current retirees benefits. We do have the ability now to supplement our income. What is PERI’s solution to this issues?

  10. Marc says:

    We should write to the all members on this legislative committee.

  11. Marc says:

    Point 1. The current 3% fixed COLA yields only 2.3% in the tenth year.
    Point 2. The CPI based COLA is also not compounded and is proposed to be capped to only up to 2 1/4%.

    This proposal will be a double hit to both active and retired members.

  12. Dale Harmon says:

    Think about it. If OPERS and the Ohio Legislature can retroactively change a vested retirement benefit specified in ORC 145.561, in this case the COLA of those who retired prior to January 2013, then what prevents them in the future from changing the pension amount or any other vested benefit? If HB 413 or similar legislation passes, then it could set a precedent for cutting retirees’ pensions in the future.

    SERS and STRS were both in financial distress at the time of their COLA changes. Neither SERS or STRS requested an increase in any of their retirees benefits. In the case of SERS and STRS, since they were both in financial distress, the State (Ohio) could, I believe, alter the terms of the “contract” to restore those retirement systems to financial health.

    In contrast, OPERS is, as they keep telling us, financially sound. Further evidence that the retirement fund is healthy is that HB 413 includes an increase for some retirees.

    Finally, unlike SERS and STRS, there legal precedent that the 3% simple interest COLA, for retirees prior to 2013, is a vested contractual right. (John J. MASCIO v. PUBLIC EMPLOYEES RETIREMENT SYSTEM OF OHIO)

    • Ginny says:

      Dale, since you are aware of this, should the PERI lawyer be doing something about this before a vote is allowed to take place?

  13. Jerry Shaveyco says:

    Who knows we may even get our Spouses health care back someday or starting with a few more bucks in ours–we have had a lot of Skulduggery as of late–in other words the old vote for our levy or we will close Kindergarten—Have they ever closed Kindergarten——OPERI are pros and they work with establish facts—and remember what your mother told you THE TRUTH WILL ALWAY WIN OUT—There are a million member of OPERS out there and I am sure the legislature is well aware of that—I would say Before they cut they will measure twice

    SEE BELOW

    Total Assets—Defined Benefit Fund

    Unaudited Quarterly Summary as of 9/30/2017
    Total Market Value: $83.7 Billion
    Quarter Return: 4.38%
    Benchmark Return: 3.61%
    Year To Date Return: 12.27%
    Benchmark Return: 11.16%
    As stated in the Defined Benefit Statement of Investment Objectives & Policies, the DB Fund’s primary performance objectives are:

    Exceed the return of OPERS’ Performance Benchmark, net of investment expenses over five-year periods;
    Exceed the actuarial interest rate (currently 7.5%) over a reasonable longer time horizon. The Benchmark combines designated market indexes for asset classes, weighted by asset allocation targets.

  14. Donna says:

    Thank you PERI for advocating for us!

  15. Jim says:

    You know how they’re saying that if this bill is passed reducing our COLAs to a 2.5% maximum and then inflation is 3% or higher for more than 3 consecutive years they could raise the COLA to 3%; well guess what? I just read the proposal on the Aging and Long Term Care Committee’s website. It turns out that not only would inflation need to 3% for 3 consecutive years, but additionally, OPERS assets would need to exceed their liabilities by more than 100%. At the rate they help themselves to raises and bonuses, this will never happen.

  16. Michael Roberts says:

    Turn the tables on them, stop making it about us, make it about them. demand an audit administratively and fiscal. Demand they match the wages and incentives – nice word for bonuses to other public pensions in other States and what they pay their public employee pension system employees. Choose states that are close to population of our size. And choice states that are fiscally solvent. Ask them why the stock market has gone up 32 percent in one year and they are going broke. Ask about incentives paid to the chief financial officer as we supposedly are not meeting targets. 3.8 million incentive in 2016. Ask why we are investing in hedge funds since 2011 when Carraher got in when they are not keeping pace with other investments and the maintenance fee paid to hedge funds manager has cost us billions. Ask why they refuse to accept other cuts and demand an analysis of what other cuts would save. And finally as she keeps telling us nothing is forever, privatize OPERS. We would not have to pay them and just pay a private company to run it. And the State of Ohio has never paid severance and according to them never will. So I guess the staff of over 600 and big shots 50 of them making more than the governor of Ohio would need to look for other employment.

  17. Retiree says:

    Continued many thanks to PERI for its advocacy. I was heartened to read the update in its quarterly newsletter. Many thanks to the retirees posting comments on PERI’s website; I have learned much.

    The ongoing fundamental principle, to my thinking, is that it is unjust to retroactively change a promised benefit. What makes OPERS’ current COLA proposal particularly egregious is that the OPERS’ information provided to potential retirees in around 2012 compared a retiree’s annual and cumulative retirement benefits based upon: 1) retiring before the 01-07-13 deadline and receiving the 3% annual simple COLA, or 2) continuing to work and earning 2.5% service credit per year with the CPI COLA. Many persons relied in good faith on that information on whether or not to retire prior to the 01-07-13 deadline.

  18. JERRY M. says:

    I agree! A total audit of Opers needs to be conducted. This point needs to be raised as the debate in the general assembly continues.

  19. Retiree says:

    Agree from what conerns have been posted by others and OPERS current actions, it appears OPERS needs to have a “really good house cleaning” as STRS did a number of years ago.

  20. Donna says:

    PERI, what say you? Will you be asking for an audit and “housecleaning” of OPERS? Sounds like one is very much needed.

  21. Dean says:

    In fairness to OPERS, the investment portfolios have been challenged by low interest rates for bonds, the market crash in 2008, high health care inflation and boomers retiring.

    But, OPERS need a performance audit. They have grossly under performed the market the last 9 years. They also paid 1 billion in fees to outside advisors for funds that routinely under performed their bench marks.

  22. Daniel says:

    I also agree that if the OPERS administration under performed the market then changes need to be made in the top Adminisrtatie positions. The next question is what is the reality that can happen? However retirees should have a controlling number of board members on the OPERS board and I don’t believe we do. After all it’s our retirement. As a group we need to work toward getting a controlling number of board members that haves our best interest in mind. Then the board can make changes when the Administration fails it’s job and cost us COLA and health care Benifits. Unfortunately for us at the current time OPERS top administrators will get raises instead of being accountable for their under performance . However It usually take something this big and a number of retirees to lose alot before us retirees realize how important there votes are and how important it is to have the correct Administrators controlling our investments. Only then will our retirement continued to pay the dividends to each retiree they have earned .

  23. JERRY M. says:

    Great info. dean! I hope P.E.R.I. includes the info. as debate in the general assembly moves forward. I also agree that retirees should have a majority on the Opers board.

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