Cincinnati Pension Fund

Update: Enquirer-City Pension Fund Tanks. City Councilwoman Roxanne Qualls is playing a leading role in attempts to reform Cincinnati's retirement benefits - most notably, the amount paid for retirees' health coverage.

SECURING THE FUTURE-REFORMING THE CINCINNATI RETIREMENT SYSTEM

Whether elected officials, city employees or retirees, or Cincinnati residents, we are first and foremost citizens of this great city. We share the common goals of building strong, vibrant neighborhoods; creating a climate for progressive economic development; and building the infrastructure for a smarter, better quality of life in our neighborhoods.  

While Cincinnati continues to experience many challenges and obstacles to achieve these goals, we have the capacity to succeed because past elected officials and civic and neighborhood leaders could put aside their narrow self-interest and make prudent, albeit difficult decisions for the good of the entire city and all our citizens.

Prior mayors and councils performed their duty as good stewards of the public purse so that even in tough economic times we could responsibly provide basic services, invest in infrastructure, and support community and economic development. Prior mayors and councils were also responsible and generous employers and created a system of employment that rewarded the people who pick up the garbage, build our roads and work with our neighborhoods with good jobs and a secure retirement.  To be both good stewards and good employers sometimes required difficult decisions.

Today's council must continue to be a good steward of the public trust and a responsible employer to all past, current and future City employees.

In 1931 the City of Cincinnati established the Cincinnati Retirement System (CRS). It stands as a remarkable achievement of fiscal planning.  It guarantees that conscientious and loyal service to the citizens of Cincinnati will produce a secure and stable retirement for employees. Unlike some public pension systems, the CRS is one of the most stable in the country because of the diligence, prudence and oversight of mayors, councils, city managers and administrators and retirement boards.

In 1960 the City of Cincinnati generously included health care benefits for retirees. The City of Cincinnati has no legal obligation to provide retiree health care benefits, but has done so in recognition of the importance of access to health care. Retiree health care benefits are not a right.

The City of Cincinnati's Retirement System pension fund is $2.6 billion. Even in these tough economic times, its funding level is at 89.5%. This includes its combined current and future medical and pension obligations. It ranks highly compared with other systems - despite the soaring costs of health care - because past councils acted as good stewards and made prudent and sometimes very difficult decisions.

Now, however, the skyrocketing cost of health care jeopardizes the future of the system, and potentially threatens the city's future ability to meet its obligations to those who have labored and continue to labor diligently in the service of Cincinnati's citizens. If left unaddressed, the growing unfunded liability of the CRS will significantly impact services and community and economic development.

The current unfunded liability of the CRS is $307 million. This is due primarily to the relentlessly rising cost of health care and the decision by Cincinnati City Council to underfund its required contribution to the CRS in order to maintain services to our citizens.  If the current underfunding continues at its current rate it is anticipated that the unfunded liability will reach $1 billion by 2018. This situation cannot be permitted to continue. If it does, it threatens the future stability of the system and our ability to honor our obligations to our citizens, our employees and our retirees.

On December 5, 2007 Cincinnati City Council established a Retirement Task Force to make recommendations to the City Council to insure the long-term stability of the Cincinnati Retirement System.  The members of the Task Force included:

Hillary Bohannon    Cincinnati Human Resources Director
Lea Carroll             Cincinnati Budget and Evaluation Director
Cathy Crain            Community Representative
Milton Dohoney       Cincinnati City Manager
Diana Frey              Representative of CODE
James Girton           Vice President and Director of Employee Benefits-5/3rd Bank
Linda Graviss           Retiree
Joe Gray                 Cincinnati Finance Director
Marijane Klug          Chair of the Retirement Board and

                                 Manager of Financial Services of the Park Board

Marianne Steger       AFSCME

Chris Stenger           Cincinnati Bell Pension Director

Francis Wagner         Former City Finance Director and current retiree


The Retirement Task Force issued its report on September 8, 2008.  Its recommendations are prudent, fair and reasonable. They balance the needs of retirees, employees, and citizens while insuring the future of the CRS. Please click on this link to read my full summary of the issue. Please click on this link to download the full report of the Retirement Task Force.

Obviously, the prospect of changing the retiree health benfits causes a great deal of anxiety among many retirees. They are urging City Council to make no changes to their health care benefit package. The Retirement Task Force worked diligently to minimize the scope and degree of changes as I believe you will see if you read the report. While it is impossible to hold everyone absolutely harmless, the proposed changes are reasonable and prudent, and were kept to a minimum. If you agree, I hope you inform the council and the Mayor.