Beginning of a State Pension Trend ? - Ohio's State Employee Pension Slashes Health-Care Benefits

A major state 

employee 

pension system 

     (Ohio) 

recently 

slashed 

health care 

benefits 

for retirees.

California and 

Illinois state 

employee pension

funds have similar 

financial problems.

And this is 

in spite of 

record stock 

and bond prices, 

that should have 

caused pension 

fund surpluses, 

or at least 

minimized their

underfunding.

Underfunding 

after 10.5+ years 

of a bull market 

in stocks and bonds, 

since mid-2009, 

is not caused by 

bad investments.

The problem is 

pension fund 

management 

( and politicians ) 

who promised 

more benefits 

to state employees 

than they are 

willing to pay for.

The politicians 

and bureaucrats 

hope to pass on 

the problems 

they caused 

to the 

next generation 

of politicians ...

after retiring with

great pensions !

OHIO:

The Ohio Public 

Employees’ 

Retirement System 

recently voted 

to cut health care 

benefits provided 

to the pension’s 

current and future 

retirees beginning 

in 2022.

The Chief 

Investment 

Officer and the 

Bond Buyer said 

the fund would have 

run out of money 

in about 11 years, 

executive director 

Karen Carraher said 

during a board meeting. 

"There is no 

available funding 

for health care" ... 

"All of the employer 

contribution[s] 

must be allocated 

to pension funding 

until that funding 

improves. 

Based on 

current 

projections, 

no funding 

will be available 

for health care 

for 15 or more 

years."

The board's 9-2 vote

eliminated the group 

health-care plan, 

and replaced it 

with stipends 

to defray costs 

for members who 

purchase plans 

on the state 

ObamaCare 

exchange.

"Surveys indicate 

members willing 

to accept 

changes/reductions 

in health care 

in the interest 

of preserving it,"  

the board’s report said.

The board 

"needs to reduce 

the cost of health 

care to preserve the

current health care 

trust fund, 

until such time 

funding can resume."

CALIFORNIA:

In late 2019, 

Capitol Weekly 

reported that 

CalPERS, 

the largest 

pension system 

in the country, 

is only about 

70% funded.

Irresponsible 

management 

gave the

state employees

ever-more-lavish 

benefits when the

technology boom 

left the fund 

    (temporarily) 

at 128% funded.

CalPERS also 

dropped 

employer 

contributions 

to near zero 

for two years,

and sponsored 

a state worker 

pension increase, 

SB 400 in 1999. 

CalPERS told 

legislators SB 400 

would not cost 

“a dime of additional 

taxpayer money.” 

State contributions 

for the next decade 

were projected 

to be below the 

fiscal 1998-1999 

level of $766 mils.

Reality was a 

state contribution

of $3.9 billion 

needed in 2009, 

thanks to the 

December 2007 

Recession 

("The Great Recession")

ILLINOIS:

Despite a new 

Democrat governor 

who promised to fix 

the pension crisis, 

Illinois' public 

pension systems' 

aggregate unfunded 

liabilities for the year 

was $137 billion: