(January 9, 2019) As we roll past 2018 and begin 2019, PERI is preparing itself for what will likely be another attempt to reduce retirees’ COLA in the Ohio General Assembly. The 133rd session, which began several days ago, will initially focus on a variety of housekeeping chores now that a new Speaker and Senate President have been elected. After a contentious battle over the past year, The House of Representatives selected a former speaker, Rep. Larry Householder (Glenford), to assume the post again. The President from last session, Sen. Larry Obhof (Medina) was re-elected to serve in that position.
The first order of business in both chambers will be the selection of committee chairs and other routine business necessary to get the respective bodies up and running. This process has already begun. The major responsibility of the General Assembly between now and the end of June will be to pass a two year state budget. Incoming Governor Mike DeWine will submit his proposed budget to the General Assembly no later than March 15th but more likely in late February. It will be reviewed in great detail by first, the House and then the Senate. Budgets notoriously go down to the last possible minute before a final version is approved by a conference committee of House and Senate members then sent to the Governor, typically on June 30th. The state has no spending authority after that date without an approved two year budget. While all this is going on, legislators in both the House and Senate will begin the process of introducing bills that will cover a variety of topics.
As you know, HB 413, which was introduced in late 2017, did not make it out of the House committee charged with hearing arguments for and against the legislation. This was the bill OPERS supported that, among its several provisions, would have reduced pre-2013 retirees’ COLA to actual inflation up to a maximum of 2.5%. PERI was opposed to this reduction and successfully lobbied to have it tabled in committee. Since the bill effectively died when the last session of the General Assembly ended on December 31, 2018, it is almost a forgone conclusion that OPERS will return soon and ask the legislature to revisit the COLA reduction and other potential plan design changes to help improve OPERS’ funded status.
While we support OPERS’ desire to reduce its amortization period and improve its funded status, we strongly believe it can be accomplished by making plan design changes that do not impact those who have already retired. We have reached out to OPERS to discuss this but have not heard from them for months regarding possible alternatives beyond the elements previously included in HB 413. We understand that OPERS has been communicating to retirees that unless concessions are made to reduce or freeze the COLA, there will no longer be any contributions made to the healthcare fund which could lead to its insolvency within 12 years. While PERI and OPERS both support the continuation of a meaningful healthcare benefit, we believe there are other ways to ensure sufficient future funding for both the pension and healthcare funds. PERI will be prepared to discuss our thoughts with legislators if and when a bill is introduced to address OPERS funding issues.
We encourage all members to remain vigilant and be prepared to take action if it becomes necessary. PERI will keep you informed of all important developments as this issue unfolds in 2019.