6/1/11 OPERS Addresses Proposed Shift in Retirement Contributions
Although the language was removed from the House-amended version of the state budget bill (Am. Sub. HB 153), discussion continues on the proposal to change the employer/employee OPERS contribution from 14% and 10% to 12% each. In the latest issue of OPERSource, 
the public employee retirement system expresses its concerns about the 2% shift and explains the impact it will have on the system's finances.
In general, the problems caused by the proposed shift in contributions rates are threefold:
(1) the shift reduces the amount of money over which the OPERS Board of Trustees has discretion to pay the unfunded liability and healthcare;
(2) the shift would increase the amount that OPERS would have to pay under one of the alternative benefit formulas used for members with shorter terms of public service; and
(3) the shift would increase OPERS' future payouts for refunds of member contributions.
In total, the OPERS actuary has determined that the proposed 2% shift would add 5.5 years to the amortization period (the amount of time it takes to amortize OPERS' unfunded liabilities). And, because the fund is currently just within the amortization period allowed by Ohio law (30 years), the proposed shift would effectively push OPERS outside of the statutory limit (to 35.5 years). Since the adoption of the 30-year limit in 1997, OPERS' amortization period has never exceeded the statutory maximum.
OPERS states that if it is the will of the Ohio legislature to restore the proposed 2% shift, it would prefer that this discussion occur in the context of the pending pension legislation (HB 69 and SB 3), rather than the biennial budget.
