Joseph T. Deters
Guest columnist

Hardly a week goes by without a major news story concerning the obstacles facing both public and private pension funds across America. Many of these funds are pension time bombs, which risk the financial futures of the members they serve.

A recent study by the Ohio Retirement Study Council's consultant, Milliman USA, has demonstrated that this is the case with respect to Ohio's five public pension systems. As stated by this report, two of Ohio's pension funds' health care reserves will be exhausted in less than two years if contributions cease. Appropriately, the Ohio General Assembly is struggling with the challenge of bringing both reform and greater accountability to the management of these systems. As we are finding out, it is no small task.

Collectively, Ohio's five systems manage more than $100 billion in assets. Over the last nine years, our pension funds have not been meeting their own actuarial assumptions, and four have not met their investment benchmarks. In 1990, George Voinovich proposed to bring accountability to the Ohio Bureau of Workers' Compensation, which was beset by similar performance and accountability issues at the time. While under the governor's control, its portfolio has consistently outperformed Ohio's five pension systems for more than five years.

These five enormous bureaucracies are run by boards of directors who, although well-intentioned, are simply not accountable to the taxpayers of this state. Should any of our public pension systems one day find themselves unable to fulfill their financial obligations to their retirees, guess who will be asked to clean up the mess? You, the Ohio taxpayer.

I appeared before the Ohio House of Representatives urging them to make someone accountable to the electorate for the conduct of these boards and funds. This could be the governor, the secretary of state or any other statewide elected official. The current model - which places the Ohio auditor and/or attorney general in minority roles on the five boards - is not working. This current structure renders these funds unaccountable to the people of Ohio.

In my testimony, I offered to be the person made accountable - but only if given the tools to bring about real change and accountability. I understood full well that I would be picking up a scorchingly hot political potato. My intent was to help defuse the time bombs that are our public pension systems.

Some contend that my suggestion would place too much power in the hands of one person. Fine. Give it to two, three or however many elected officials is deemed to be the "right" number. But simply swapping statewide elected officials from board to board is hardly the answer. Elected officials are accountable to the citizens of Ohio and need to be the watchdogs for our retired firefighters, police officers, teachers, school bus drivers and public servants. This is my pension, too.

Some say that my proposal is about the selection of money managers, brokers and consultants. They are wrong. It is about why it took more than 100 members of the Legislature to cause one pension fund executive director's resignation. This is about unfunded liabilities that could consume more than two-thirds of the state's one-year budget. This is about why some of these pensions, by one expert's estimate, are only 50 percent funded.

It is to everyone's benefit that we are having this debate in Ohio. The time has come to make our five public pension systems accountable, not just to their memberships, but to all Ohioans. I remain prepared to be part of the solution.

---

Joseph T. Deters is the Ohio state treasurer.