Proposed pension reform that would have closed off Cincinnati’s current system to new employees and reduce benefits for current employees met a resounding defeat Tuesday as residents voted four to one against the ballot measure.
The proposed amendment sought to rein in the city’s $862 million unfunded liability but received criticism for being primarily funded by out-of-state interests connected to the Tea Party. The final tally was 78 percent against, 22 percent for.
The local chapter of the American Federation of State, County and Municipal Employees (AFSCME) issued a statement applauding Issue 4’s defeat while vowing to help fix the city’s troubled $2.1 billion retirement system.
“Today's vote will be heard beyond Cincinnati and sends a message for those on the ideological extremes who think it is ok to impose their agenda on an entire city. Had this passed, outside money and political extremists would have cost Cincinnati taxpayers more money, with less services,” said Peter McLinden, Cincinnati-area Regional Director at AFSCME Ohio Council 8.
The proposal would have affected 7,500 workers, retirees and their beneficiaries and shut off the city’s defined benefits plan to new hires to enroll them in a 401(k) style plan. Current employee’s future benefits would have decreased as the multiplier that factors into a worker’s total pension amount would be reduced by nearly one-third (2.2 percent down to 1.5 percent for most workers) for all benefits accrued after June 2014. Other limitations, like a cap on city contributions and limitations on cost-of-living increases, were proposed.
The Cincinnati City Council opposed the measure, saying that closing off the current defined benefits and requiring the liability to be paid off in a decade would have delivered a near-fatal blow to the city’s budget. Issue 4 was on the ballot this fall thanks to a signature drive paid for by Cincinnati for Pension Reform, a group largely made up of former tea partiers. The committee is chaired by Chris Littleton, who is also co-chair of the state Tea Party Group, the Ohio Liberty Coalition.
Still, the city’s unfunded liability has been a persistent problem as prior attempts to tackle it have failed. Changes made in 2011 failed to address the system’s then-$728 million unfunded liability. In a statement issued Tuesday to Governing, Paula Tilsley, executive director of the Cincinnati Retirement System, said Issue 4's defeat validates the board of trustee's work in trying to address the unfunded liability. She added that "reform is necessary" and that the board plans to present recommended changes to the system to the council this fall.
In a Center for Retirement Research study released this week, Cincinnati ranked 14th out of 178 cities ordered by the burden pensions place on taxpayers. Pensions eat up 12.5 percent of Cincinnati's total revenue base, according to the study.