Government Workers vs. the Taxpayers
Ohio Senate Passes Anti-Union Bill
Editor's Note: I replaced the word "rights" with "provisions" in this story since collective bargaining is not a human right but a power given to union members via labor laws.Rather than the lack of collective bargaining privileges for public sector unions making public employees second class citizens, the existence of public sector collective bargaining makes public employees "super citizens" and relegates the rest of the public to second class status. - David Y. Denholm, Beyond Public Sector Unionism: A Better Way, Public Service Research Foundation, 1994
The collective bargaining laws have given enormous political power to the public sector unions. No matter what the real intent of these laws, by any objective standard they are not in the public interest. They represent an expression of the selfish self-interest of public sector union organizers and, indirectly, the interest of the politicians who enact them in order to curry favor with the union's political operatives. - David Y. Denholm, Beyond Public Sector Unionism: A Better Way, Public Service Research Foundation, 1994
March 3, 2011
Wall Street Journal - Ohio state senators narrowly approved a bill that would prohibit public-employee unions representing 400,000 state and local workers from bargaining over health benefits and pensions, while also eliminating the right to strike.
While national attention has focused for weeks on a similar battle in Wisconsin, the vote, by 17-16 in Ohio's Republican-controlled Senate, virtually ensured that the Buckeye State will become the first to strip collective-bargaining priviledges from public employees as states grapple with recent gaping budget deficits.
The move is especially significant because Ohio is larger than Wisconsin, and like its fellow Midwestern state, is both a stronghold of public-sector labor unions and a swing state politically.
The bill now goes to the House, where the Republicans have a 59-40 majority. If approved, as expected, it will move for signature to Republican Ohio Gov. John Kasich, who supports the bill.
Mr. Kasich believes it would help local governments control labor costs, spokesman Rob Nichols said.
Ohio's labor leaders, while noting the narrow passage in the Senate, weren't optimistic about stopping the bill in the House.
"We're expecting it to pass," said Jason Perlman, a spokesman for the Ohio AFL-CIO. But, he added, "We are hopeful those in the Ohio House will see this bill is nothing more than an attack on the middle class."Republican lawmakers say worker pay and benefit cuts are needed to offset projected budget shortfalls.
"If we're going to grow in Ohio, we cannot raise taxes," Republican state Sen. Keith Faber said Wednesday.William Batchelder, Republican Speaker of the Ohio House, said a House committee will begin holding extensive hearings on the bill next week.
"I think the bill has a good chance of passing. What form it will take I would have to say will be unclear," he said.U.S. Labor Secretary Hilda Solis criticized the moves in Ohio and other states to curtail bargaining rights.
"Some state leaders have gone too far," Ms. Solis said Wednesday night, in a conference call with thousands of activists from the Communications Workers of America. "Budget sacrifices are one thing, but demanding workers give up their rights as union members is another."The Senate approval in Ohio of the controversial measure could send a sweeping message across the industrial heartland and in states with relatively high union density that the clout held by organized labor has weakened. Multiday protests by teachers and firefighters on the steps of state capitol buildings haven't necessarily swayed Republican lawmakers who see labor contracts as expensive and inflexible.
Protests have been held over the past two weeks in state capitals across the country to protest proposed legislation to limit union rights of public and private sectors. The protests were sparked more than two weeks ago when Wisconsin Gov. Scott Walker presented his budget repair bill that included stripping unions of the right to bargain over pension and health care contributions. While the unions would retain the right to collective bargaining over pay, the bill would also cap wage increases to the rate of inflation.
In Indiana, Republican lawmakers proposed a right-to-work bill that would have allowed private-sector workers to opt out of joining unions, a move that prompted House Democrats to flee the state to avoid a vote.
All three of those states have a relatively large union presence. Ohio has 655,000 union members, both public and private, representing 13.7% of its workers. In Wisconsin, 355,000, or 14.2%, of its public and private workers belong to unions; in Indiana, 279,000, or 10.9%, of its workers belong to public or private unions.
In Ohio, Republicans have a 23-10 majority in the Ohio Senate, but six broke with GOP leaders and opposed the bill.
"It was as close as it could be," said Joe Schiavoni, the ranking Democrat on the Senate insurance, commerce and labor committee. He said he hoped House Republicans would "make sweeping changes if not throw the whole bill out and start all over."Union officials have conducted a coordinated effort to try to block bills in Wisconsin and Ohio that would curtail collective bargaining for public workers, and right-to-work legislation introduced in 13 states, including New Hampshire and Missouri. Those bills would allow workers in the private sector to opt out of paying dues or belonging to a union. Such legislation threatens the unions' funding and their political clout heading into the 2012 elections.
Taking away collective bargaining provisions for state public employees has occurred before. In 2005, Republican Indiana Gov. Mitch Daniels signed an executive order ending collective bargaining for state workers.
In Wisconsin, Republican state senators on Wednesday passed a resolution fining 14 Democrats who left the state Feb. 17 to prevent a vote on Republican Gov. Walker's bill restricting public employees' collective-bargaining. The vote on the resolution didn't require a quorum, unlike the budget bill that would curb bargaining.
The Wisconsin Democrats, who are in Illinois, will be fined $100 a day for their absence when the Senate is in session. Several of the Democrats went to Kenosha, Wis., Monday to meet with Republican Wisconsin Senate Majority Leader Scott Fitzgerald, said Fitzgerald spokesman Andrew Welhouse. But the fines seemed to set back efforts to break the impasse.
"Sen. Fitzgerald's schoolyard-bully tactics aren't productive to resolving the serious issues at stake," Democratic Wisconsin Senate Minority Leader Mark Miller said in a statement. "His actions today undermine Democrats' ability to have a professional relationship with him."Mr. Walker says his bill's restrictions on collective bargaining, and a provision requiring employees to contribute more of their take-home pay toward pensions and health insurance, could be used to offset major cuts to school districts and local governments in the two-year budget he presented Tuesday.
Unions say the benefit changes proposed for workers amount to an average 8% pay cut. Unions representing state workers have agreed to the governor's proposed financial concessions.
On Wednesday in Indiana, B. Patrick Bauer, the Democratic House minority leader, traveled to Indianapolis and met with Republican House leader Brian Bosma for about an hour to discuss concerns the Democratic caucus has with several bills that would restrict union power. Mr. Bauer and other House Democrats fled to Illinois last week to halt those measures.
"No negotiations took place," said Tory Flynn, a spokeswoman for Mr. Bosma. "The speaker needs the Democrats to return to the statehouse to do their jobs."
Union Bill Restricting Collective Bargaining of Public Employees Whizzing Through Ohio Legislature
Ohio's unfunded pension liabilities equals about $19,000 per state citizen.March 3, 2011
AP – While much of the nation's attention remains focused on a stalled proposal in Wisconsin to restrict collective bargaining rights for public workers, an Ohio measure that in some ways is tougher and broader is speeding toward reality.
A Senate panel and then the full chamber approved the Ohio measure Wednesday amid jeers from onlookers. The bill would restrict the collective bargaining rights of roughly 350,000 teachers, firefighters, police officers and other public employees, while Wisconsin's would affect about 175,000 workers and exempt police and firefighters.
"For as far-reaching this thing is and how many lives it will affect, I can't believe how fast it moved," said Columbus Police Sgt. Shaun Laird, who wanted lawmakers to spend more time debating the changes.Wisconsin's bill remains in limbo after Democrats hightailed it for the Illinois border on the day the Senate was to adopt the bill. Their absence left the chamber one member short of the quorum needed for a vote.
In contrast, the Ohio bill could go as early as next week to House committee hearings. Republicans hold a 59-40 majority in the House, where the measure is likely to receive strong support.
Ohio Gov. John Kasich, a Republican like his Wisconsin counterpart, Scott Walker, praised the development. Both have pushed the collective bargaining bills as part of budget-balancing measures.
"This is a major step forward in correcting the imbalance between taxpayers and the government unions that work for them," Kasich said.The differences and similarities between the two proposals are many and nuanced, especially because lawmakers continue to debate and insert or subtract individual proposals. But to critics, at least one thing is clear: Both bills are meant to weaken the role of the unions.
"From the perspective of unions, both bills are punitive and would severely restrict what they have traditionally bargained over and what they have done as organizations," said Harley Shaiken, a professor at the University of California at Berkley who specializes in labor issues.The Ohio bill would ban strikes by public workers and establish penalties for those who do participate in walkouts. State workers in Wisconsin are already prohibited from striking.
Unionized workers in Ohio could negotiate wages, hours and certain work conditions — but not health care, sick time or pension benefits. The measure would do away with automatic pay raises, and base future wage increases on merit.
Wisconsin's measure would forbid most government workers from collectively bargaining except over wage increases that aren't beyond the rate of inflation. Police and firefighters would be exempt.
Both states' capitols have been mobbed by protesters, Ohio's not as intensively as the two-week-long siege in Wisconsin. Protesters in Ohio were fewer Wednesday during the marquee vote in the Senate than they were the day before, when 8,500 demonstrators gathered inside and out.
"Shame!" firefighters and teachers shouted in the Senate chamber as the measure squeaked through on a 17-16 vote.Standing in the rotunda afterward, Columbus firefighter Terry Marsh said he understood the Legislature's need to look for ways to save on costs and examine collective bargaining.
"But to ram something through within a few weeks is irresponsible, and to blame the budget woes of the state on the workers is a downright travesty," he said.Ohio's legislation would also set up a new process to settle worker disputes, giving elected officials the final say in contract disagreements. Binding arbitration, which police officers and firefighters use to resolve contract disputes as an alternative to strikes, would be eliminated.
Republican Sens. Tim Grendell of Chesterland and Bill Seitz of Cincinnati spoke out against the new proposed way to resolve disputes. Grendell said the process would turn workers into beggars before city councils and other officials who oversee them.
"No one can be a judge and advocate in their own cause," Seitz said. "That's called 'heads I win, tails you lose.'"Seitz had expressed disappointment in the bill and was removed from the panel by its leaders, a move that secured the votes needed to get the legislation before the full Senate.
Anthony Caldwell, spokesman for the Service Employees International Union, District 1199, said the union's focus will now turn to the House. Members there serve shorter terms and may be more vulnerable to repercussions at the ballot box than senators, he said.
"We hope that the members of the House will understand the valuable role working families play in their districts," he said. "The House is a two-year body. Whatever happens, people are going to remember that. This isn't just about union issues, this is about working people."
Ohio Public Pensions
Sunshine Review - Over 2010 Ohio lawmakers struggled to erase some of the unpaid debt for its public pension systems. In February 2010 Forbes Magazine ranked Ohio 49 for its By October 2010, Ohio moved up Forbes list to 43, however, unfunded pension liabilities, which equaled about $19,000 per state citizen. By October 2010, Ohio moved up Forbes list to 43, however, the unfunded liability was still $19,110 per citizen.In January 2011 representatives from the five public pension funds appealed to lawmakers with proposals to raise member contributions and cut benefits in an effort to ensure their long-term viability. The appeal did not include raising employer contributions. All the pension systems proposed reducing benefits, although in some cases the effects would vary between current retirees.
Ohio has five public retirement systems: the Highway Patrol Retirement System, Ohio Police & Fire Pension Fund, Public Employees Retirement System, School Employees Retirement System and the State Teachers Retirement System.
The Ohio Retirement Study Council is a panel that monitors the funds so they remain solvent and assists the state legislature, governor and other public officials in the formation of sound public pension policy.
Plan Breakdown
In Ohio, nearly 400,000 public retirees receive benefits from the five systems, and Ohioans now pay more than $4 billion a year toward those benefits.
| Plan | Current Value | Percentage funded | Unfunded liabilities | Total state employees | Avg. pension |
|---|---|---|---|---|---|
| Highway Patrol Retirement System | $730 million | xx percent | $xx billion | 1,597 active members | $xx |
| Ohio Police and Fire Pension Fund | $xx billion | xx percent | $xx billion | 12,774 active members | $38,000 |
| Public Employees' Retirement System | $75.7 billion | 75 percent | $xx billion | 365,229 active members | $20,522 |
| State Teachers' Retirement System | $58.8 billion | xxx percent | $40 billion | 174,807 active members | $42,899 |
| School Employees' Retirement System | $xx million | xx percent | $xx million | 125,465 active members | $xx |
Highway Patrol Retirement System
The Highway Patrol Retirement System was created in 1944 by the Ohio General Assembly. It was initially open for state troopers and communications personnel employed by the Highway Patrol. Now membership is limited to troopers with arrest authority and trooper cadets in training at the Highway Patrol Training Academy. All sworn officers, cadets in training at the academy and members of the radio division hired prior to Nov. 2, 1989 are required to become members of the Highway Patrol Retirement System.
The system provides age and service, disability, survivor, and death benefits, as well as health care coverage for benefit recipients and eligible dependents. The contribution rate for employees is 10 percent and the state contributes 26.5 percent.A final average salary is derived from the total of the highest three years of salary divided by three.
Each benefit recipient is eligible to receive a cost of living adjustment; however, the type of pension benefit will impact when the 3 percent COLA adjustment is received.
Public Employees Retirement System
PERS was established in 1935 to provide retirement for Ohio public employees. The PERS serves nearly 954,000 members, including active, inactive and retirees.
All employees who are paid in whole or in part by the state of Ohio, a county, municipality, or any other political subdivision of state or local government in Ohio must become members of PERS unless they are covered by another state retirement system in Ohio or by the Cincinnati Retirement System. Membership begins from the first date of employment.
Pension is determined by taking the average of three highest years of salary.
In 2010, the Pew Center on the States Study rated Ohio as a “solid performer”, their highest ranking.
School Employees Retirement System
| Number of pension plans | Pension assets ($bn) | Stated liabilities ($bn) | Funding status (% of tax revenue) |
|---|---|---|---|
| 5 | 115.5 | 190.9 | -847% |
Funds Seeking Increases
The Ohio Police & Fire Pension Fund is seeking an increase of public contributions from 19.5 percent of police salaries to 25 percent, and from 24 percent of firefighter salaries to 25 percent, in the next few years.
STRS has asked the legislature to increase public contributions to the fund from 14 percent of teacher and administrator salaries to 16.5 percent over the next few years.
The Highway Patrol Retirement System increased public contributions from 25.5 percent of salaries to 26.5 percent last year.
TransparencySeven Ohio newspapers requested records from the state's five public pension systems in July 2010. The papers wanted information on contributions and benefits of the plans' 400,000 recipients and asked them to withhold names, addresses and any identifying information. All systems declined the request on the grounds that such disclosure would violate the privacy of the members, even though the papers.
"We are not seeking to expose any individual's personal information, but to examine the trends and patterns that may have contributed to why the state's pension systems are in trouble," said Susan Goldberg, editor of The Plain Dealer.Two state lawmakers have said that they want to open up state retirement records to public scrutiny and are researching possible legislation.
Investment Losses
The Ohio Public Employees Retirement System suffered a 26.8% investment loss in 2008, one of the hardest hit state pension funds of all the states, according to a study by the Pew Center on the States. A recent study by economists Joshua Rauh of the Kellogg School of Management at Northwestern University and Robert Novy-Marx of the University of Chicago Booth School of Business concluded that the Ohio pension fund will run out of money in 2023.
Funding Levels
The state's pension liabilities can be calculated in a variety of ways, which yield different numbers. Below are the numbers as calculated by to the Pew Center on the States, the American Enterprise Institute and Professors Robert Novy-Marx of the University of Chicago and Joshua Rauh of Northwestern University, Kellogg Graduate School of Management.
The state's non-pension liabilities were 38% funded in 2008, one of the best rates among states that provide post-retirement benefits other than pensions. The performance was a result of the state consistently contributing to the pension system. A maximum pension contribution was statutorily set at 14% of payroll for general employees in the Ohio Public Employees Retirement System which for several years was more than the required contribution, so the state put the additional funds aside to fund future retiree health care benefits.
Rate of ReturnOhio presumes a 8.00% return rate on its pension investments.
Pension funding could be in more trouble then is typically reported by public retirement systems. This is because they typically report an expected return on investment of 8 percent, which has not held up in the market. However, if the public retirement systems change this figure at all, the amount of unfunded liabilities skyrockets by billions of dollars. [Source]Lobbying Efforts
According to a Cleveland Plain Dealer investigation, Ohio's five public pension systems have spent more than $2 million a year to influence lawmakers. Their combined annual budgets of nearly $2.3 million for "government relations" includes salaries of officers required to register with the state.
Money on lobbying efforts spent by each pension plan are:
- PERS - $1.14 million
- STRS - $557,000
- SERS - $393,000
- OP&F - $110,000
- HPRS - $80,000
- The Buckeye Institute posted, on January 1, 2006, a state employee salary database here.
- As of January 2009, the Buckeye Institute has provided information on certain salaries received by Ohio State University employees. The database is available here.
- In July 2009, the Buckeye Institute requested a salary database for all City of Columbus employees. Detailed salary information on the top 10 salaries in 2008 can be found here. Information on the top overtime earners for 2008 can be found here.
- Salary 2005 data on certain state employees is available here.
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