Examining the solvency and resiliency of Ohio’s public pensions

Ohio’s public pensions are estimated to have unfunded liabilities exceeding $68 billion, with only 76% of the assets needed to fulfill retirement promises made to the state’s public workers. Several meaningful reforms have slowed the growth of the state’s pension debts, but the path to full funding is still a long one, and its public pensions are still at great risk of future funding crises.

Reason Foundation’s Pension Integrity Project was invited to testify before the Ohio House of Representatives Pensions Committee on the current status of the state’s pensions and the potential risks that policymakers should prepare for.

The analysis shared with the committee uses actuarial modeling to examine the potential cost and funding outcomes of the State Teacher Retirement System of Ohio (STRS) and the Ohio Police and Fire Pension Fund (OP&F). Reason Foundation finds that major challenges could arise—including insolvency and perpetually growing costs—if the pension plans face another major recession. Examining a current proposal to increase employer contributions for police officers in OP&F (House Bill 296), Pension Integrity Project modeling shows that the commitment of additional funding would do little to protect the pension fund from the risks of insolvency.

Considering the potential burdens that these public pensions could generate for state and local budgets, Ohio policymakers need to seek reforms to improve the resiliency of their retirement systems.

The slides shared with the committee are available here, and the video of the testimony is available here.