Thursday, July 21st, 2011
Pensions get large chunk of budgets
By William Kincaid
Public employee pensions paid in part by the city of Celina, Mercer County and local schools account for hundreds of thousands of dollars in annual expenditures, according to local officials.
"It's a significant amount of money, but we don't have a choice," Celina auditor Emily Stewart said.
Public entities are mandated by the state to contribute a certain percentage toward employee pensions based on what each worker earns.
In 2010, Celina paid $871,889.60 in pension contributions to its estimated 218 employees, according to Stewart. Of that total, $491,895 was contributed to pensions of employees in the Ohio Public Employees Retirement System (OPERS) and $379,994 was contributed to fire and police pensions.
The city must contribute 24 percent of a firefighter's pay to their pension, 19.5 percent to a police officer's pension and 14 percent to all other public employees' pensions.
All city employees, police officers and firefighters contribute 10 percent toward retirement, Stewart said.
Stewart said pension payments are derived from multiple city accounts, such as the general, electric and wastewater funds. The city's total gross payroll for all employees in 2010 was $5.369 million, with $871,889 going toward pensions. City expenses last year totaled $43.13 million.
Stewart said the city has to account for pension contributions, as well as insurance, medicare and workers compensation fees, when considering creating a new position or hiring a new employee.
"We have to keep a balanced budget," she said.
If the budget can't be balanced through personnel costs, other expenditures - ultimately city services - must be reduced, she said.
Ohio Gov. John Kasich proposed changes to the state's pension plan in his initial budget proposal in the spring. However, the idea to decrease the percentage of contribution from government and increase the amount given by an employee failed to make it into the plan signed into law June 30.
According to an OPERS press release, 90 percent of OPERS retirees live in Ohio and spend a majority of their retirement money on goods and services in the state. For every $1 of taxpayer contributions to OPERS, investments, employee contributions and other sources of revenue return more than twice that amount to the Ohio economy, the organization says.
Public employees paying into a pension plan do not pay Social Security and, therefore, do not receive a Social Security check for the years worked in a public office.
"Pension systems are major economic drivers for Ohio ... without pensions, public workers in Ohio who don't pay into Social Security would have no major source of retirement and health care, thereby, increasing the burden on government programs," OPERS CEO Chris DeRose said in the press release.
Mercer County and local schools also are responsible for contributing toward employee pensions.
Like Celina, pension contributions to Mercer County employees come from multiple accounts, according to Mercer County Deputy Auditor Carol Coy.
The county contributes 14 percent to most employee pensions while employees contribute 10 percent. Employees considered deputies receive a county contribution of 18.1 percent, while they contribute 11.6 percent, Coy said.
County pension contributions for this year for the 415 employees are estimated at $1.77 million and are expected to account for 3.2 percent of all county funds, Coy said. She estimates $533,194 will come from the $9.48 million general fund and $1.237 million will come from other funds.
Local schools contribute pension payments to all employees too, according to Fort Recovery Local Schools Treasurer Lori Koch and Celina City Schools Treasurer Mike Marbaugh.
Schools contribute 14 percent to employee pensions while employees contribute 10 percent through either State Teachers Retirement System (STRS) of Ohio or School Employees Retirement System (SERS) of Ohio.
Asked about the sustainability of pension contributions, Koch said they are required payments and a part of the school's operating costs. They must be reflected in five-year financial forecasts and budgets, she said.
In fiscal year 2010-2011, Fort Recovery schools contributed $539,471 to teachers and administrators enrolled in STRS. Koch said 64 teachers were as well as multiple subs in the program.
The school also contributed $141,754 to the 44 non-teaching employees - such as Koch - enrolled in SERS.
Celina City Schools contributed $2.071 million to STRS in fiscal year 2010-2011, Marbaugh said. Marbaugh estimated that contributions were made to about 350 employees, which includes full-time teachers, subs and administrators.
The school also contributed $746,928 to SERS.
A large majority of STRS payments were derived from the general fund, which was $29.64 million in 2010-2011, he said.