Board Report, September 2023

Representative Abrams introduces updated Public Safety Pension Modernization Act

Ohio State Representative Cindy Abrams introduced the updated Public Safety Pension Modernization Act on Oct. 5, 2023.

This bill refines a previous one from the last session, making moderate and reasonable changes to modernize and ensure the ongoing solvency of the Ohio Police and Fire Pension Fund (OP&F).

The primary component of the bill, which also marks a departure from two years ago, concerns the employer share of the pension payments for first responders. While this bill maintains the employer share for firefighter pensions at 24 percent, it proposes to equalize the employer share for police to 24 percent, ensuring parity for all first responders.

Representative Abrams emphasized that this revised legislation serves a crucial purpose, acknowledging the feedback and discussions over the past two years.

“We make a commitment to take care of Ohio police officers and firefighters for life, and this bill is a significant step towards honoring that commitment,” Abrams said. “Over the past two years, we’ve actively listened. As a result, this bill proposes no increase for firefighters and only a modest 4.5 percent hike for police - a necessary move to guarantee the pension fund’s long-term stability for the future generation of first responders.”

The earlier proposal recommended raising employer contributions for both police and firefighters to 26.5 percent, translating to an increase of 7.0 percent for police and 2.5 percent for firefighters.

This current bill acknowledges the substantial benefit reductions already borne by first responders and the rise in their own contributions to the pension fund.

It's pivotal to mention that employer contributions had remained static since 1986 prior to this legislation. Added to this are new challenges like a spike in early retirements and recruiting difficulties for first responders, which hamper payroll growth, setting the stage for impending challenges.

Mary Beth Foley, Executive Director of OP&F, shared that while this bill addresses pressing concerns, it could be just the beginning in ensuring the fund's long-term stability.

“A few years ago, we had forecasted a turbulent phase for capital markets, and it has indeed transpired,” Foley said. “This bill serves as a stabilizing measure and a commendable initial step. We'll maintain an ongoing dialogue with lawmakers to stay proactive in market irregularities and keep our commitment to first responders at the crux of policy discussions.”

This legislation has garnered the support of the OP&F Board of Trustees, comprising both active and retired police and firefighters. In addition, the Fraternal Order of Police of Ohio and the Ohio Association of Professional Firefighters have endorsed this bill.

HB 94 would remove provision affecting service credit transfers

A bill is making its way through the Ohio House of Representatives that OP&F hopes will correct an issue that has affected some OP&F members for the last several years. Ohio House Bill 94 would remove a provision added in 2015 that has adversely affected some public safety employees by blocking their career paths and earnings potential.

The provision currently in place blocks experienced OP&F members from reasonably accepting employment in a number of law enforcement positions covered by OPERS. It states that the amount of an OPERS member’s service credit in OPERS must be greater than the amount of credit to be transferred or purchased from OP&F. Consequently, those who worked in an OP&F-covered position for most of their career and then accepted an OPERS-covered position, must accumulate more years of service with OPERS before becoming eligible to retire.

It has always been the standard that maximum portability be afforded to public employees in Ohio. This provision severely limits that portability.

PORTFOLIO UPDATE

Board of Trustees Committee Notes

(Motions voted on by the Board are listed separately)

DISABILITY: The Committee conducted its scheduled reviews and appeal hearings.

FINANCE: OP&F staff presented the proposed 2024 Operating Budget and 2024 Capital Budget for consideration. The Board will vote on the budget at the December Board of Trustees meeting. A discussion took place on different uses of platoon systems for fire departments and OP&F’s role of defining full time hours for fire employees. Additional study will be done and findings will be discussed at the January committee meeting.

INVESTMENT: In addition to a review and discussion of the investment portfolio, consultants and staff presented several recommendations for the Board to consider. These items are listed below.

HEALTH CARE: OP&F health care partner Alight presented the 2023 health care plan review and discussed the open enrollment for 2024. The Committee also received the August 2023 Health Care Stabilization Fund Report.

Motions:

At its September 2023 meeting, the OP&F Board of Trustees approved the following motions:

• Disapproved one Death Benefit Fund case.
• Approved 14 Initial Determinations of Disability.
• Approved one Initial Benefit Termination.
• Approved four appeal hearings.
• Approved the Disability Reporting Waivers list.

NEXT BOARD OF TRUSTEES MEETINGS: Oct. 31-Nov. 1, 2023