Ohio public pensions lose $32 billion in 2022, will take years to recover

Ohio's five public pensions systems collectively lost $32 billion in the tough investment market last year − huge losses that will take years to recover.

The biggest loss occurred with the biggest system, Ohio Public Employees Retirement System, which lost $19.7 billion. OPERS serves 1.2 million workers and retirees. The 2022 loss represents about 12% of the total portfolio.

State Teachers Retirement System of Ohio lost $9.5 billion, which represents 9.64% of the portfolio. It serves roughly 465,000 active and retired teachers.

Ohio Police & Fire Pension Fund lost $1.74 billion, which was 9.04% of the portfolio. It serves nearly 60,000 active and retired police and firefighters.

School Employees Retirement System lost $949 million, which was 4.89% of its portfolio. It serves 236,000 non-teacher school employees including bus drivers and cafeteria workers.

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Ohio Highway Patrol Retirement System, the smallest fund of the five, lost $109.9 million, which was 10.1% of its portfolio.

Public employees in Ohio don't contribute to Social Security so the public pensions represent their main retirement funds.

The heavy losses represent a big swing away from how much the pension funds anticipated earning. The pension boards set their expected annual rate of return, ranging from a low of 6.9% for OPERS to a high of 7.5% for OP&F.

The funds enjoyed big returns in 2020, ranging from 9.21% to 16.9%, and even bigger gains in 2019, ranging from 17.23% to 19.59%.

STRS: Lack of confidence?

Infighting and discord on the 11-member State Teachers Retirement System board continues to be an issue.

In mid-February, the board deadlocked in a 5-5 vote of confidence for STRS Executive Director Bill Neville. A faction of the board blames Neville for investment losses and what they view as a lack of transparency.

While debating the confidence vote, STRS Board Member Julie Sellers said "We have to have a change at the top."

Sellers, Elizabeth Jones and Steve Foreman captured three seats on the board in May 2022, ousting incumbents. The three newcomers joined board members Wade Steen and Rudy Fichtenbaum in expressing no confidence in Neville.

An anonymous group backed the three challengers via a website, post card mailers and billboards. And STRSWatchdogs.org, a grassroots group of retirees and teachers, endorsed Sellers, Jones and Foreman.

STRS Board Chairwoman Carol Correthers said "Bill Neville has my complete confidence."

She noted that in his two-and-a-half years as director, STRS retirees received a 3% cost of living bump, health care premium rebates and active teachers no longer have to work to age 60 to receive their pension.

"Importantly, STRS has maintained strong funding in both the pension fund and health care fund," she said.

OP&F: Failed to get a rate hike in 2022

Last year, the police and fire pension fund failed to convince lawmakers to increase the amount employers must contribute.

The legislation called for increasing local governments' rates to 26.5% of payroll for cops and firefighters, up from the current rates of 19.5% and 24%, respectively. The hike would be passed on to taxpayers.

Local governments opposed the bill.

OP&F Director Mary Beth Foley said that if the rate increase wasn't approved, the system would have to cut benefits for police and firefighters.

Foley said state Rep. Cindy Abrams, R-Cincinnati, plans to reintroduce the bill this session.

This article originally appeared on The Columbus Dispatch: Ohio public pension funds lost $32 billion in 2022