The legislature has recessed for the summer and it is anticipated that hearings on certain legislative proposals will resume in late September. What follows is an update on a number of proposals with which PERI has been involved.
H.J.R. 6 is perhaps the most significant issue. As you may recall from our last newsletter, the Resolution proposes to amend the Ohio Constitution to prohibit the state and the five retirement systems from contracting with or investing in certain companies doing business in Iran, Sudan, and Syria. PERI has consistently opposed the action of those who would like to use the five retirement systems to further some political, social, or personal agenda.
Legislative proposals affecting the retirement systems are required to be reviewed by the Ohio Retirement Study Council (ORSC). What is of significance here is that H.J.R. 6 was reviewed and the ORSC staff recommended that the Council disapprove the Resolution. At it’s June 9th meeting, the Council did vote to disapprove H.J.R. 6. Hopefully this effectively will kill the proposal. One of the main reasons for the disapproval included the following: “H.J.R. 6 establishes a precedent that trust funds and trust fund property may be used for purposes other than the exclusive benefit of the trust funds’ membership.”
This is basically the same argument that PERI has long used when opposing attempts by others to use the systems for some political, social, or personal agenda. Proponents of H.J.R. 6 justify their actions by contending that the funds held by the retirement systems in member’s accounts is taxpayer’s money and thus it is appropriate to use the systems to express a political point of view. At one time this money was taxpayers’ money, but PERI contends that it loses its characterization when it was paid to public employees for their services. Thus, the systems should not be used to further a political, social, or personal agenda.
Unfortunately, this line of reasoning doesn’t seem to hold when it comes to H. B. 284. True, this bill is different from H.J.R. 6 in that it would add extortion and perjury and certain federal offenses to the list of offenses that may result in the forfeiture of retirement benefits when committed by certain individuals. We oppose this bill on the grounds that it would use the forfeiture of retirement benefits as an additional punishment for the commission of certain criminal offenses. We see this as using the systems to further a political agenda. The bill passed the House in late May.
Another bill we are following is H. B. No. 520 which would make a number of technical changes affecting the five retirement systems. Among the changes that would affect OPERS include the following:
1) Requires an independent actuary to complete an actuarial study to determine the appropriate percentage of a public institution of higher education employee’s contribution to mitigate any negative financial impact on OPERS, STRS, and SERS by participating in an alternative retirement program.
2) Cincinnati Retirement System: allows an OPERS member with credit in the Cincinnati Retirement System to transfer the credit if the member’s service credit in OPERS is greater than the amount of credit sought to be transferred. It also allows the transfer of OPERS credit to the Cincinnati Retirement System if the service credit in the Cincinnati Retirement System is greater than the amount of credit sought to be transferred.
3) Disability: under current law a disability benefit recipient is required to undergo an annual medical examination. Under the bill this is changed: the recipient will be required to undergo a periodic medical examination as determined by the board’s medical consultant or as specified in rules adopted by the board.
4) Survivor benefits: under current law a child is eligible for survivor benefits if the child is under age 18 or under age twenty-two and attending school. The bill changes this provision to make all those individuals under age twenty-two eligible for survivor benefits, regardless if they are attending school.
This bill was recommended for passage by the ORSC staff and the Council voted to accept the recommendation of staff along with a few technical changes which are in the process of being drafted. It is anticipated that the bill will be heard again by the House Health and Aging Committee in September.
H. B. No. 305, which has been enacted, is also of interest. Under current law, non-teaching employees of the University of Akron participate in SERS and teaching employees participate in STRS. The act will allow newly hired non-teaching employees of the University of Akron as members in OPERS instead of SERS. Existing SERS members will continue to participate in SERS. However, if a person who is employed by the University on the effective date of this law change and who later terminates employment and then is rehired by the University not less than twelve months after the date of termination that person will be in OPERS. According to the ORSC, the University of Akron is the only four-year state university in Ohio whose non-teaching employees are in SERS rather than OPERS.
H. B. No. 257 contains a number of unrelated provisions, one of which would modify current law governing the re-employment of retirees. It should be noted that it does not affect current retirees. If enacted, future re-employed retirees will not be considered to be members of OPERS. They will forfeit the pension portion (employer contribution) of the retirement allowance when the employment commences and this forfeiture will end when the employment ceases. The annuity portion (employee contribution) of the retirement allowance will be suspended when the employment begins and will accumulate to the credit of the retirant; it is to be used in a recalculation of the retirement allowance after employment ends. The proposal also provides that neither the retirant nor the retirant’s employer is to contribute to OPERS on the retirant’s behalf.
The bill has been assigned to the House Finance Committee and has not been heard by the committee as of yet. We believe the bill has very little chance of passing.