The Ohio Retirement Study Council (ORSC) was created in 1968 in direct response to the consolidation of local police and fire pension funds. Prior to 1967, police and firefighters were members of local pension funds rather than a statewide fund. In the mid-1960’s, many of Ohio’s 454 local police and fire pension funds faced financial disaster. They had routinely disregarded the financial impact of benefit increases, and as a result, many were close to financial insolvency. Consequently, they were consolidated into a statewide fund in 1967. Because of this financial crisis, the General Assembly saw a need for continuing oversight of the state pension funds to ensure they remained financially solvent, resulting in the creation of the ORSC.
At that time, the local pension funds transferred assets totaling approximately $75 million to the Ohio Police and Fire Pension Fund and accrued liabilities of approximately $490 million. The cities were given a 67-year period, beginning in 1969, to pay their unfunded accrued liabilities. As of December 31, 2015, the remaining unfunded accrued liability totaled nearly $23.8 million.
The general purpose of the Council is to advise and inform the state legislature on all matters relating to the benefits, funding, investment, and administration of the five statewide retirement systems in Ohio: the Public Employees Retirement System, covering all state and local government workers; the State Teachers Retirement System, covering teachers at public schools, colleges, and universities; the School Employees Retirement System, covering non-teaching school employees; the Police and Fire Pension Fund, covering full-time police officers and firefighters; and the State Highway Patrol Retirement System, covering state troopers. Legislators are accustomed to dealing in two-year budgetary cycles, but decisions about public pension plans typically involve significant long-term costs, such as 30-year pension obligations. If not made carefully and with foresight, such decisions can seriously threaten the budgetary stability of state and local governments years later when the pension obligations become due. Those decisions can also result in an unfair burden on future generations of taxpayers and adversely affect the credit rating of the state or local government’s debt.
In addition, the Council provides legislative oversight with respect to the Ohio Public Safety Officers Death Benefit Fund, a state-funded program providing death benefits to the survivors of law enforcement and public safety officers killed in the line of duty and the Volunteer Fire Fighters' Dependents Fund, a program providing benefits to disabled volunteer firefighters and their survivors. The Cincinnati Retirement System is the only municipal retirement system in Ohio, and it falls outside the jurisdiction of the Council.
The Council has its own consulting actuary and investment consultant, PTA/KMS. PTA/KMS conducts reviews independently of the systems’ actuaries, including a review of the actuarial analysis required for all retirement legislation having any measurable financial impact on the systems and a semiannual review of the policies, objectives, and criteria of the systems’ investment programs. The Council played an instrumental role in establishing the statutory requirements for an actuarial analysis of retirement legislation and the semiannual review of the systems' investment programs.
The Ohio Revised Code mandates that the Council shall perform the following statutory duties:
(1) Make an impartial review from time to time of all laws governing the public retirement systems and make recommendations to the legislature on any changes the ORSC finds desirable with respect to benefits, sound financing of benefit costs, and prudent investment of funds (R.C. 171.04(A));
(2) Report annually to the governor and legislature on its evaluation and recommendations with respect to the operations of the public retirement systems and their funds (R.C. 171.04(B));
(3) Study all proposed changes to the public retirement laws and report to the legislature on their probable costs, actuarial implications, and desirability as a matter of sound public policy (R.C. 171.04(C));
(4) Review semiannually the policies, objectives, and criteria of the systems’ investment programs (R.C. 171.04(D));
(5) Have prepared, at least once every ten years, an independent actuarial review of the annual actuarial valuations and quinquennial actuarial investigations prepared by each system (R.C. 171.04(E));
(6) Have conducted a fiduciary performance audit of each system at least once every ten years (R.C. 171.04(F));
(7) Provide each Council member with copies of all proposed rules submitted by the retirement systems and submit any recommendations to the Joint Committee on Agency Rule Review (R.C. 171.04(G));
(8) Review the police and fire contribution rates and makes recommendations to the legislature that it finds necessary for the proper financing of OP&F benefits (R.C. 742.311(B)); and
(9) Prepare an independent actuarial study every three years on the required employer supplemental contribution to be made on behalf of academic and administrative employees of higher education electing an alternative retirement plan (R.C. 171.07).
Outside of its statutorily mandated duties, the Council may establish a uniform format for any report that is required to be submitted to the Council by the boards of the state retirement systems. The Council also may request that the auditor of state perform or contract for the performance of a financial or special audit of a state retirement system.