Ohio Lawmakers Close to Pension Reform Compromise

December 9, 2003 (PLANSPONSOR.com) - State of Ohio legislative negotiators are apparently close to agreeing on a compromise pension reform bill that strips out two controversial provisions from a version passed by the House in November.

According to news reports, House and Senate negotiators tentatively agreed to remove requirements that Ohio’s five public-employee pension funds use Ohio-based brokers and money managers for a majority of their equities trades. They also tentatively agreed to kill a provision that would have given state Treasurer Joe Deters the authority to appoint the executive directors of the pension boards.

Lawmakers said their goal is to take final action on the legislation this week, though they were still working on some details late Monday.

Instead of the provision requiring a majority of equity trades be carried out by Ohio-based brokers and money managers, the measure now requires the pension funds to give preference to Ohio investment firms when trading equities and choosing money managers. The Ohio firms would have to meet certain criteria, such as managing a minimum amount of assets, said Senator Lynn Wachtmann, a northwest Ohio Republican and sponsor of a Senate bill on pension reform.

“It assures Ohio companies a preference, when all things are equal,” Wachtmann told reporters. “But there would be no goals or percentages, no quotas.”

The Ohio House and Senate approved competing pension reform bills last month, and have been working to reach a compromise ever since (See  Ohio Legislature Passes Competing Pension Reform Bills ). The latest version of the reform bill keeps the oversight provisions that were in both bills. It would require regular performance audits at the retirement systems, and board members would have to adopt travel and ethics policies and file financial disclosure statements, Wachtmann said.

Lawmakers began working on the legislation after newspaper reports of questionable spending and frequent travel by board members of retirement systems for teachers, police and firefighters (See  Dyer Steps Down From Ohio STRS Post ).