by German Lopez
City Council reluctantly allows ballot initiative to move forward
Despite unanimous opposition, City Council fulfilled duties dictated by the City Charter and voted to allow a controversial pension amendment to appear on the ballot this
Vice Mayor Roxanne Qualls explained that all council
members oppose the amendment, but it’s part of City Council’s
ministerial duties to allow ballot initiatives if petitioners
gather enough signatures to put the issue to a public vote. The Hamilton County Board of Elections
announced on Aug. 12 that petitioners had gathered enough signatures to
clear the 7,443 requirement.
The amendment would privatize Cincinnati’s pension system
so future city employees — excluding police and fire personnel, who are
under a separate system — contribute to and manage individual
401k-style accounts. Currently, the city pools pension contributions and
manages the investments through an independent board.
City officials oppose the
amendment. They say it will cost the city more and hurt retirement gains
for city employees.
One new concern: As written, the amendment could force the
Internal Revenue Service (IRS) to revoke tax-exempt status for city
employees’ retirement plans. Paula Tilsley, executive director of the
Cincinnati Retirement System, says the new tax burden would force
someone in a lower tax bracket with $100,000 in retirement savings to
immediately pay $15,000 in taxes.
Supporters of the amendment, including out-of-state tea
party groups, argue it’s necessary to address Cincinnati’s present and
future pension liabilities, which currently stand at $862 million.
The current liability is a result of two issues: City
Council has underfunded the pension system by varying degrees since at
least 2003, and economic downturns have hurt investments in the city’s
That outstanding liability was one of the factors that led Moody’s, a credit ratings agency, to downgrade Cincinnati’s bond rating on July 15.
City officials say they’ve already taken steps to resolve future costs and the only remaining concern is how to
pay for the current liability. In 2011, City Council raised the retirement age and reduced pension benefits for city employees
“This council adopted some of the most sweeping changes to
any public pension system in the country for current and future
employees,” Qualls said.
Councilman Chris Smitherman clarified he doesn’t support
the proposed amendment, but he says City Council has done a poor job
with the current pension system.
“My recommendation to this council is to put forth a
solution to solve the problem,” Smitherman said. “You can’t have your
cake and eat it too. You can’t say, ‘This is bad,’ and then underfund
Tilsley says the pension board will make recommendations
to City Council within a month to address the current pension liability.
The board estimates the changes would keep the system 100 percent
funded after 30 years.
CityBeat covered the amendment and the groups that might be behind it in further detail here.Updated (2:17 p.m.): Updated to reflect the full City Council vote.
Critics say burden falls too heavily on current workers
0 Comments · Wednesday, March 23, 2011
In an effort to fortify Cincinnati’s ailing retirement system for municipal workers, City Council narrowly approved a package of reforms March 16 aimed at reversing the system’s current course toward a projected $1 billion shortfall. In a 5-4 vote, City Council approved reforms that stiffen eligibility requirements, reduce some benefits and increase the retirement age for current workers.
0 Comments · Wednesday, January 13, 2010
We at WWE! realize that in 17 years things will be a lot different — technology will be increasingly difficult to use and people who are 10 right now will be able to kick our asses. Another thing that’s going to suck is that the $1.9 billion Cincinnati Retirement System is going to be broke unless fundamental changes are made soon.