Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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BILL: |
DATE: |
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STATUS: |
SPONSOR: |
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LOCAL IMPACT
STATEMENT REQUIRED: |
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STATE FUND |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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General Revenue Fund |
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Revenues |
- 0 - |
- 0 - |
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Expenditures |
- 0 - |
Possible increase or
decrease |
Possible increase or
decrease |
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Retirement Systems – PERS,
OP&F, STRS, and SERS |
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Revenues |
- 0 - |
Possible savings |
Possible savings |
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Expenditures |
- 0 - |
Possible increase |
Possible increase |
Note: The state
fiscal year is July 1 through June 30.
For example, FY 2007 is July 1, 2006 – June 30, 2007.
·
The
provisions to restrict a Public Employees Retirement System (PERS), Ohio Police
and Fire Pension Fund (OP&F), State Teachers Retirement System (STRS), or
School Employees Retirement System (SERS) member who retires from public
employment and subsequently returns to the same or substantially equivalent
position from receiving a pension while earning a salary for that employment
may increase the number of delays in retiring and subsequently returning to the
same or similar work. Consequently, the
state's personnel and compensation expenditures may increase slightly. However, the retirement systems' liabilities
may decrease as the number of public employees who would retire early and
collect retirement benefits may be reduced.
·
The
provisions authorizing the retirement board to make a determination on whether
the post-retirement position is the same or substantially equivalent to the
pre-retirement position for all uncertain cases may minimally increase the
retirement systems' administrative costs.
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LOCAL
GOVERNMENT |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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Counties and Other Local Governments |
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Revenues |
- 0 - |
- 0 - |
- 0 - |
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Expenditures |
- 0 - |
Possible increase or decrease |
Possible increase or decrease |
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Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.
·
The
provisions to restrict a PERS, OP&F, STRS, or SERS member who retires from
public employment and subsequently returns to the same or substantially
equivalent position from receiving a pension while earning a salary for that
employment may increase the number of delays in retiring and subsequently
returning to the same or similar work.
Consequently, local governments' personnel and compensation expenditures
may increase.
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The bill proposes to
prohibit any member of the Public Employees Retirement System (PERS), Ohio
Police and Fire Pension Fund (OP&F), State Teachers Retirement System
(STRS), or School Employees Retirement System (SERS) who retires from public
employment and subsequently returns to the same position or a substantially
equivalent position in public employment from receiving a pension while earning
a salary for that employment.
The bill also specifies a
new penalty that would forfeit pension[1]
and suspend annuity portions of the retirement allowance until the end of
reemployment for members who retired less than 180 days before returning to
employment. The bill requires that the
suspended annuity be paid in a lump sum and the total retirement allowance
resume after the termination of the post-retirement employment.
The new benefit forfeiture
and annuity suspension under the bill applies to all re-employed retirees in
PERS, OP&F, SERS, and STRS, including an elected or appointed official in
PERS. The bill also eliminates current
penalty and forfeiture provisions that apply to a PERS elected or appointed
public official retiree. The bill has
minimal fiscal impact to the state and local governments. The bill would also have minimal fiscal
impacts to PERS, OP&F, STRS, and SERS.
The proposed post-retirement
re-employment restrictions and penalties to PERS, OP&F, STRS, or SERS
retirees may discourage public employees from retiring within their first month
of eligibility. The restrictions and
penalties may also increase the number of delays in retiring and subsequently
returning to the same or similar work.
Accordingly, state and local governments' personnel and compensation
expenditures may increase if delays in retirement increase. In general, personnel and compensation
expenditures are lower in the early years of employment versus the end of
employment.
Conversely, if the number of
public employees who would retire early and collect retirement benefits is
reduced and individuals work longer in the same public employment, the
retirement systems' liabilities may decrease.
The impact on the retirement systems' future liabilities and expenditures
is expected to be minimal. In addition, the bill specifies that the relevant
retirement board shall make a determination on whether the post-retirement
position is the same or substantially equivalent to the pre-retirement position
for all uncertain cases. The board's
decision is final. This provision may
minimally increase the retirement systems' administrative costs.
LSC fiscal staff: Ruhaiza Ridzwan, Economist