Conservative study suggests tea-party backed pension amendment would reduce benefits
2 Comments · Wednesday, October 2, 2013
A conservative group’s report helps explain why most of Cincinnati’s political establishment strongly opposes a tea party-backed pension amendment.
by German Lopez
Posted In: News
at 04:29 PM | Permalink
Conservative group finds city’s pension liability could be three times current estimate
A Sept. 27 report
from the conservative Buckeye Institute echoes claims made by both
sides in Cincinnati’s pension debate: A tea party-backed amendment, if
approved by voters on Nov. 5, would reduce retirement benefits for new
city employees by one-third. At the same time, the city’s unfunded
pension liability might be three times what officials currently
The Buckeye Institute’s summary of the report vaguely supports the tea party-backed amendment and touts its benefits, but the details and findings in the report are much more mixed.The tea party-backed amendment would privatize Cincinnati’s pension system so city employees hired after January 2014 would contribute to and
manage individual retirement accounts, which would also be supported by
a proportional match from the city. That’s a shift from the current
system in which the city pools pension funds and manages the investments
through an independent board. The idea is to move from a public plan
and instead imitate a 401k plan that’s often seen in the private sector.Opponents of the amendment say it would massively reduce
city benefits and actually increase costs for the city — two issues that the Buckeye
Institute’s report acknowledges as real possibilities.Officials are also concerned that the city would be forced
to pay into Social Security, which would impose additional costs, if
the tea party-backed system isn’t exempt from the federal retirement
program. The current pension system absolves the city government from paying into Social
Security.Supporters of the amendment say the drastic changes are
necessary to help solve the city’s growing pension liability, which city
officials put at $862 million.The Buckeye Institute report argues that even the city
estimates are too low. When pricing the city’s pension liabilities
through fair market value — a measure widely embraced by economists —
the unfunded costs actually stand at $2.57 billion. That puts the pension
system at 35 percent funding, which means the city will have to make up
the 65-percent hole with extra payments.But the report also confirms a key claim for the amendment’s opposition: Future city
employees would get about one-third less benefits under the tea party’s proposed system than they would under
the current pension system.The benefit reductions should save Cincinnati $19.7 million a year, according to the report. But the savings estimate doesn’t consider cost-of-living adjustments, which the report says will rise for future employees and shrink savings over time. The estimate also assumes the tea party’s
proposed system will be able to keep Cincinnati’s Social Security
exemption, which city officials say is unlikely.
Despite the reductions, the Buckeye Institute claims the final benefits will be
better than comparable 401k plans in the private sector, but the
assumption hinges on the city meeting its full contribution to
employees’ individual retirement accounts. The tea party amendment allows — but it doesn’t require —
the city to contribute up to 9 percent of an employee’s salary to retirement accounts. The city
contributes only 2 percent of payroll under the current system, which
is already strained for costs.The report also acknowledges that, if interpreted a
certain way, the tea party amendment could force the city to pay for its
unfunded pension liability in just 10 years, down from 30 years. Paying
the liability that quickly
could prove unmanageable for a city that hasn’t passed a structurally
balanced budget since 2001.
The pension amendment is backed by tea party groups, some of which may reside outside of Cincinnati and Ohio. They argue the reform is necessary to stabilize the city-funded retirement system.
Meanwhile, Cincinnati for Pension Responsibility announced
its formation on Sept. 27 and promised to get voters to oppose a “risky
plan” that “could cost taxpayers millions.” Mayor Mark Mallory, all current council
members, the AFL-CIO, ProgressOhio and other groups have joined the opposition.
Opponents readily acknowledge the current system’s
problems and unfunded liability, but they argue the city would be better
off making reforms within the current system instead of adopting the
tea party’s plan. Some of those reforms are expected to come before City
Council in the next couple months.
Voters will make the final decision on the tea party’s pension amendment when it appears as Issue 4 on the Nov. 5 ballot.
by German Lopez
Food stamp rules to hit locals, city defends allowances, charterites oppose pension initiative
Gov. John Kasich’s refusal to seek another waiver for
federal regulations on food stamps will force 18,000 current recipients
in Hamilton County to meet work requirements
if they want the benefits to continue. That means "able-bodied"
childless adults will have to work or attend work training sessions for 20 hours a week starting in October to continue getting food assistance. The renewed rules are coming just one month before federal stimulus funds for the food stamp program are set to expire, which will push down the $200-a-month food benefits
to $189 a month, or slightly more than $2 a meal, in November. In light of the new requirements, the Hamilton County
Department of Job and
Family Services will help link people with jobs through local partnerships and
Hamilton County's SuperJobs Center,
but that might be difficult for food stamp recipients who have past
convictions, mental health problems and other barriers to employment.The city administration defended its proposal to restore $26,640 in car allowances
for the mayor, city manager and other director-level positions in the
city government, just a few months after the city narrowly avoided
laying off cops, firefighters and other city employees by making cuts in
various areas, including city parks. City spokesperson Meg Olberding
says car allowances are part of traditional compensation packages in
other cities Cincinnati competes with for recruitment, and she says that
the compensation was promised to city directors when they were first
hired for the jobs. But Councilman Chris Seelbach says the proposal is
out of touch and that he's more concerned about lower-paid city employees,
such as garbage collectors, who haven't gotten a raise in years, much
less a $5,000 car allowance. The Charter Committee, Cincinnati's unofficial third political party, came out against the tea party-backed pension ballot initiative. The committee recognizes Cincinnati needs pension reform soon, but it says the tea party proposal isn't the right solution. The tea party-backed amendment would privatize Cincinnati's pension system so future city employees — excluding cops and firefighters, who are under a different system — would have to contribute to and manage 401k-style retirement accounts. Under the current system, the city pools and manages pension funds through an independent board. Supporters argue the amendment is necessary to deal with the city's growing pension liability, but opponents, including all council members, argue it would actually cost the city more and decrease employees' benefits. CityBeat covered the amendment and the groups behind it in further detail here.State Rep. John Becker of Clermont County wants U.S. Judge Timothy Black impeached because the judge ruled Ohio must recognize a Cincinnati same-sex couple's marriage in a death certificate. The judge gave the special order for locals James Obergefell and John Arthur, who is close to death because of a neurodegenerative disease with no known cure called amyotrophic lateral sclerosis (ALS).Hamilton County Administrator Christian Sigman says if the city were to synchronize its mayoral primary elections with other state and county elections, it could save money by spreading the share of the costs. The Sept. 10 primary cost Cincinnati $437,000. The change would require altering the city charter, which needs voter approval.The Ohio Department of Education will soon release revised report card grades for Cincinnati Public Schools and other school districts following an investigation that found the school districts were scrubbing data in a way that could have benefited their state evaluations.An Ohio bill would ban drivers younger than 21 from driving with non-family members in the car and bump the driving curfew from midnight to 10 p.m., with some exceptions for work and school.A University of Cincinnati football player is dead and three others are injured following a single-car crash.Ohio gas prices rose as the national average dipped.Here is a map of air pollution deaths around the world.
0 Comments · Wednesday, September 4, 2013
Despite unanimous opposition, City
Council on Sept. 3 fulfilled duties dictated by the City Charter and
voted to allow a controversial pension amendment to appear on the ballot
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.
by German Lopez
Tea party-backed reform would privatize Cincinnati’s pension system
Councilman Chris Smitherman told CityBeat he doesn’t support the pension amendment that will appear on the ballot this November, which means no council member approves of the controversial proposal.
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 and unions claim the amendment will cost
the city more and hurt retirement gains for public employees. Tea party groups say
the amendment is necessary to address the city’s growing pension costs,
including an $862 million unfunded liability.
“I do not support the amendment. I have introduced several
solutions that have been ignored by council and your paper,” Smitherman
wrote in an email.
The other eight members of City Council — seven Democrats
and one Republican — on Aug. 7 approved a resolution
that condemned the tea party amendment. But Smitherman, an Independent,
wasn’t present at the meeting.
CityBeat covered the amendment and the groups that could be behind it in further detail here.
by German Lopez
Outsiders back pension reform, Requiem could be evicted, JobsOhio conflicted in interests
Local and national tea party groups are pushing a ballot initiative that would privatize Cincinnati’s pension system
by moving city workers from a public plan to 401k-style plans, but city
officials and unions are urging voters to reject the measure because
they claim it would raise costs for the city and reduce gains for
retirees. Cincinnati for Pension Reform paid Arno Petition Consultants
nearly $70,000 to gather enough signatures to get the initiative on the
ballot. It’s so far unclear where that money came from. Virginia-based
Liberty Initiative Fund, which is supporting a similar pension proposal in
Tucson, Ariz., is backing the Cincinnati effort, with one of two
blog posts on its website
praising the local initiative. Liberty Initiative Fund has given at
least $81,000 to the Tucson campaign. For more information about the
Cincinnati campaign and initiative, click here.
Hamilton County Judge Carl Stitch on Wednesday ruled against granting a temporary restraining order
that would prevent the trio that owns and leases the Emery Theatre from
evicting the nonprofit seeking to renovate the building. The ruling
means Requiem Project, which was founded in 2008 to renovate the
theater, might be kicked out by the University of Cincinnati, Emery
Center Apartments Limited Partnership (ECALP) and the Emery Center
Corporation (ECC), the groups that own and lease the Emery Theatre.
Still, the judge said that the ruling should in no way indicate what the
final outcome of the case will be and it could turn out that
Requiem deserves a long-term lease.
Gov. John Kasich received campaign donations from and
served on the board of Worthington Industries, a central Ohio steel
processor, before the company got tax credits from JobsOhio,
the privatized development agency. Kasich’s spokesperson told the
Associated Press that the governor severed ties with Worthington before the
tax deals were approved. Still, the latest discovery adds to a series of
conflicts of interest that have mired JobsOhio in the past few weeks.
Previously, Dayton Daily News found that most of the board
members on JobsOhio had direct financial ties to some of the companies
getting state aid. Republicans defend JobsOhio because they say its
privatized and secretive nature allows it to carry out job-creating
development deals more quickly, but Democrats say the agency is too
difficult to hold accountable and might be wasting taxpayer money.
Commentary: “Disparity Study Now.”
State officials are looking to tighten limits
for local governments passing budgets, issuing debt and funding
pensions. State Rep. Lou Terhar, a Republican from Cincinnati, and State
Auditor Dave Yost say the proposal is aimed at correcting pension
problems such as the one in Cincinnati, which Yost labeled
“Pension-zilla.” Cincinnati’s unfunded pension liability currently
stands at $862 million, which earned the city a downgraded bond rating from Moody’s in a July 15 report.
A task force convened by Ohio Supreme Court Justice Maureen O’Connor is set to meet again to discuss possible changes to the state’s death penalty.
The panel recently proposed eliminating the use of capital punishment
in cases in which an aggravated murder was committed during a burglary,
robbery or rape.
A record number of white women, many from rural areas, are being sent to Ohio prisons, according to a report from the Sentencing Project, a Washington, D.C., think tank.
Two City Council candidates are struggling to get their names on the ballot
because of a couple different circumstances. Newcomer Mike Moroski fell
46 petition signatures short of the requirement of 500 signatures that
have to be turned in by Aug. 22. Meanwhile, hundreds of Councilman P.G.
Sittenfeld’s petitions might be thrown out because several dates were
corrected by crossing them out and writing the accurate date on the back
of the forms. The Hamilton County Board of Elections says it’s unclear
whether it can accept those signatures. Both candidates are now renewing
their petition drives to ensure they appear on the Nov. 5 ballot.
Candace Klein is resigning as CEO of SoMoLend,
the embattled local startup that previously partnered with the city of
Cincinnati to link local businesses to up to $400,000 in loans. City officials
Monday they were severing ties with SoMoLend after it was revealed that
the Ohio Division of Securities is accusing the company of fraud
because SoMoLend allegedly failed to get the proper licenses and exaggerated its
financial and performance figures. SoMoLend’s specialty is supposed to
be using crowdfunding tactics to connect small businesses and startups
with lenders, but the charges have called its expertise into question.
Metro, the city’s bus system, turns 40 today, and it plans to hold a party on Fountain Square from 11 a.m. to 1 p.m. in celebration.
Activist hedge fund manager Bill Ackman sold a majority of his Procter & Gamble stocks.
Popular Science has the list of the 10 weirdest robots at this year’s drone show here.
Out-of-town tea party groups take aim at Cincinnati’s struggling pension system
3 Comments · Wednesday, August 14, 2013
Local and national tea party groups are
backing a city charter amendment that would semi-privatize Cincinnati’s
ailing pension system.
by German Lopez
Posted In: News
at 03:47 PM | Permalink
Campaign paid nearly $70,000 to gather petitions in city
The tea party-backed amendment that would semi-privatize
Cincinnati’s ailing pension system gathered enough signatures earn a place on the November ballot.
Of 14,215 signatures scrutinized so far, 8,653 were valid, according to Sally Krisel, deputy director of the Hamilton County Board of Elections. That clears the requirement of 7,443 signatures, but the numbers will grow as the board continues counting petitions.
The success follows a well-funded effort from Cincinnati
for Pension Reform, which paid California-based Arno Petition Consultants
nearly $70,000 to collect enough signatures, according to petition
documents obtained through the city.
The amendment would privatize pension plans so city
employees hired after January 2014 contribute to and manage their own
retirement accounts — a shift from the current set-up in which the city
pools pension funds and manages the investments through an independent
But unlike private-sector employees, city workers might
not qualify for Social Security benefits, which means they would lack
the safety net and benefits that shield them from bad investments.
Alternatively, the city could be required to pay into
Social Security. An Aug. 5 report from the city administration claims
that would make the tea party-backed system more expensive than the
current pension system, which would defeat the reform’s main intention.
Supporters of the tea party amendment say it’s necessary
because Cincinnati is dragging its feet in addressing an $862 million
pension liability, which earned the city a downgraded bond rating
from Moody’s in a July 15 report. Although the city passed reforms in
2011 addressing future pension costs, the unfunded liability actually
grew by $134 million between 2012 and 2013.
The Cincinnati Retirement System board is working on
changes that would address the unfunded liability, but so far no
agreement has been reached as board members argue over whether taxpayers
or retirees should be hit hardest by more cost-cutting measures.
City officials acknowledge the issues with the current
pension system, but they claim the tea party-backed amendment would
exacerbate cost problems and reduce payments to future city retirees.
“Under the guise of ‘reform,’ a well-financed out-of-state
group is pushing an amendment that spells economic disaster for the
future city retirees and the city’s budget,” Vice Mayor Roxanne Qualls
said in a statement. “Current and future retirees need an income they
can live on. This amendment is a budget-buster for retirees and the
City Council condemned the amendment in a resolution unanimously passed on Aug. 7.
CityBeat’s Aug. 14 news story will give an in-depth look at the amendment and the campaign behind it.This story was updated at 5:07 p.m. with the most up-to-date numbers.
by German Lopez
Pension amendment to appear on ballot, city cuts ties with SoMoLend, heartbeat bill returns
A tea party-backed pension amendment yesterday cleared the hurdle of 7,443 petition signatures required to appear on the November ballot. Cincinnati
for Pension Reform, the group behind the amendment, had previously paid
nearly $70,000 to petitioners to gather signatures. The amendment
would privatize pension plans so the city and city employees hired after
January 2014 would contribute to individual retirement accounts that
the employee would then manage by independently selecting investments.
That’s a shift from the current system in which the city pools pension
funds and manages the investments through an independent board. But
unlike private-sector employees, city workers might not qualify for
Social Security, which means they’ll lack the safety net that typically
comes with risky 401k-style plans. If workers do qualify for Social
Security, the city would have to pay into the federal entitlement
program, which would cost the city more money, according to an Aug. 5
report from the city administration.
Cincinnati is cutting ties with SoMoLend,
the local startup that had previously partnered with the city to
connect small businesses and startups with $400,000 in loans. SoMoLend
has been accused of fraud by the Ohio Division of Securities, which says
the local company exaggerated its performance and financial figures
and lacked the proper licenses to operate as a peer-to-peer lending
business. The Division of Securities won’t issue a final order until
after a hearing in October. SoMoLend’s specialty is using crowdfunding
tactics to connect small businesses and startups with lenders.
Ohio Republicans are considering bringing back the “heartbeat bill,”
the controversial anti-abortion bill that would ban induced abortions
after a heartbeat is detected, which could happen as early as six weeks
into a pregnancy. The bill could be reintroduced next week. That would
come just a couple months after Republican legislators and Gov. John
Kasich approved a slew of anti-abortion measures through the two-year state budget.
The Ohio Senate will today hear testimony
from the Health Policy Institute of Ohio about projections that show
the state could save money if it takes up the Medicaid expansion. As
part of Obamacare, states are asked to expand their Medicaid programs to
include anyone at or below 138 percent of the federal poverty level. In
return, the federal government will pay for the expansion for the first
three years and wind down to paying 90 percent of the costs after that.
The Health Policy Institute previously estimated the expansion would
save Ohio roughly $1.8 billion and insure nearly half a million Ohioans in the
Councilwoman Laure Quinlivan is touting Cincinnati Safe Student Housing,
a website that allows university students to pick from housing options
that passed a free fire inspection. The website was unanimously approved
by City Council following several university students’ deaths to fires,
which council members argue could have been prevented with stronger
The new owner of the former Terrace Plaza Hotel says he will reopen the building as a hotel.
Alan Friedberg, managing principal of the company that bought the
building earlier this year, says the process of bringing back the
building will take a lot of time and work, considering it’s now been
vacant for three years.
Four Greater Cincinnati hospitals have been recognized for protecting the LGBT rights of patients and employees by the Human Rights Campaign Foundation: Bethesda North
Hospital, Good Samaritan Hospital, the Veterans Affairs Cincinnati
Medical Center and Cincinnati Children’s Hospital Medical Center.
Ohio Attorney General Mike DeWine rejected a ballot initiative that would have legalized marijuana in Ohio. DeWine claims the summary for the ballot initiative is untruthful and leaves out various important details.
Mason, a Cincinnati suburb, was ranked one of the top 10 places to live by CNNMoney. Maybe CNN really likes Kings Island.
Ohio Sen. Sherrod Brown was in Cincinnati yesterday to
call on the U.S. Department of Veterans Affairs to expedite processing
on benefit claims. The VA currently has a backlog of 500,000 veterans,
according to a press release from Brown’s office.
Introducing Elon Musk’s Hyperloop,
a proposal for a railway system that would use high-pressure tubes to
shoot passengers around the country. It’s estimated traveling from Los
Angeles to San Francisco, which normally takes about five and a half
hours, would only take 30 minutes in the tubes.