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Senate Bill 5: Dollars and Cents

While the immediate cost saving benefits of Senate Bill 5 are questionable, the long-term negative consequences of its taking effect are certain.

With only days to go before election day we are being bombarded with ads from both sides concerning Senate Bill 5. While the ads for both sides contain a lot of sound bites, they contain very little factual information. The bill itself is 304 pages long, and difficult to understand. I have been through it four times now and have dissected its parts and have seen its entrails spewed out upon my desk. Some things are clear, such as the powerful blow it will deliver to public employee unions in the state of Ohio. Other things are not so clear. The fuzziest picture of all is the monetary impact that Senate Bill 5 will have upon the state of Ohio, its local government entities and school districts.

The proponents of Issue 2 would have you believe that Senate Bill 5 will go a long way toward reducing this year’s $8 billion deficit in Ohio; but nothing could be further from the truth. The immediate impact of Senate Bill 5 upon the state’s budget will be minimal. Consider governor Kasich’s call for all public employees to pay 10 percent of their wages toward their retirement and 15 percent toward the cost of their health care. First of all, every single one of the employees of the state of Ohio currently pays 10 percent of their wages toward their retirement. According to the State Employment Relations Board, a state agency headed by an appointee of Kasich, all state employees actually pay more than 15 percent of their health care. According to the board’s report issued earlier this year, state of Ohio employees with single coverage pay 16.9 percent of their health care premium, while those state of Ohio employees receiving coverage under a family plan pay 17.8 percent of the premium.

The call for public employees to pay 10 percent toward their retirement actually only impacts  a quite small number of our public employees. The vast majority of public employees (well over 90 percent) pay the full 10 percent contribution required by law toward their retirement. A small number in various communities have what is called a pension pickup. That is where the employer pays all or part of their pension contribution. The number of employees receiving a pickup has been steadily declining as new contracts come up for negotiation. So while this provision will have some impact on certain local governments, the fact remains that it will have no impact whatsoever on the budget of the state of Ohio. The focus on pensions in Senate Bill 5 is a bit of a misdirection as well because pension reform for Ohio’s five public employee retirement system is currently being addressed by the Ohio legislature in Senate Bill 3 and House Bill 69.

To be fair, there will be some savings to some local governments and school districts under the 10 percent retirement and 15 percent health care payment provisions, but it will be minimal in the case of the retirement provision. The requirement for public employees to pay 15 percent of their health care costs will have a more significant impact upon local governments and school districts than upon the state, because the state employees already pay more than 15 percent toward their health care. The State Employment Relations Board (SERB) states in its report that statewide, public employees pay an average of 9.5 percent for coverage under a single policy and 10.7 percent for coverage under a family policy, while all state of Ohio employees pay 16.9 percent of their health care premium for a single plan while those employees receiving coverage under a family plan pay 17.8 percent of the premium. The savings to any individual local government or school district will depend upon their current agreements with its employees and vary widely. And significant savings in health care costs will only be seen some time in the future if Senate Bill 5 goes into effect.

One of the provisions of Senate Bill 5 is that health care becomes an item that is not open for negotiation. Employees will have no say-so or input about the health care they will receive. Even though Senate Bill 5 says that employees must pay at least 15 percent of their health care costs, it is quite likely that they will pay significantly more. If not through a higher percentage of the premium cost, they more likely will be required to pay higher deductibles and co-pays and have to accept lesser coverage. Teachers and school employees could be hit the hardest with reduced health care benefits and out-of-pocket expenses. Section 9.901 (B) of Senate Bill 5 creates the School Employees Health Care Board, a new bureaucratic division of state government aimed at regulating and controlling the health care benefits of teachers and school employees. Further on in Senate Bill 5 there is a provision in section 9.901 (J) to create the School Employees Health Care Advisory Committee under the School Employees Health Care Board. Both aim to control the health care of our teachers and school employees without any input from them.

But all of the aforesaid savings are mostly future savings of an uncertain amount that will do little to offset this year’s $8 billion deficit.

If Issue 2 is approved, there will be some limited savings in the first year. Longevity pay for public employees will be a thing of the past. The projected savings from the elimination of longevity pay would be hard to estimate, especially since a lot of contracts are now calling for reductions in longevity pay and the elimination of longevity pay for newly hired employees. Another area of some savings would be in the elimination of what are called step increases within public employee classifications. These savings through elimination of step increases is problematical in that they could be offset by raises based upon “performance." The stipulation that raises and even employment by public agencies be based upon performance is found in many sections of Senate Bill 5. However, there is no definition or criteria for what constitutes “performance” in Senate Bill 5. The definition and criteria for performance-based raises in the public sector will only be known some time in the future because Senate Bill 5 gives the Ohio Director of Administrative Services the power to define “performance."  While we are on the subject of performance in public service, section 124.94 (A) of Senate Bill 5 creates another level of bureaucracy titled the Ohio Commission for Excellence in Public Service with 11 members and additional committees as it deems necessary.

The performance of school teachers is a complicated matter that seems to have received special attention in Senate Bill 5. In a complicated performance evaluation process that includes peer review, teachers pretty much lose any consideration of their length of service under Senate Bill 5. For some reason, teachers and school employees seem to be singled out in Senate Bill 5 in that they will be hardest hit by the bill, in my opinion. Perhaps it is because teachers and school employees make up more than half of our public employees in Ohio. Or maybe it is because Gov. Kasich has a personal grudge against teachers. Of that I cannot be sure nor would I want to speculate on the matter.

Another area where there will be nebulous savings under Senate Bill 5 is in the changes in the payout of accumulated benefits upon retirement or lawful termination of public employment. The bill limits the payment for items such as accumulated sick leave and accumulated vacation. But these savings won’t materialize until some future unknown date as employees reach retirement age. In fact, there could be an increase of payouts in the near future to employees as they rush to retire in order to beat the decrease in payments for accumulated benefits when Senate Bill 5 takes effect.

Vacation time and sick leave time is somewhat limited by Senate Bill 5. The maximum amount of vacation will be five weeks for employees with 19 years of service and the sick leave is reduced from 15 days a year to 10 days a year. Both items will result in uncertain saving only at a future date. And you will most likely see an increase in the amount of sick days taken by public employees as the figure they might as well use the sick time rather than let it go to waste. Once again, the immediate impact of the reduction in vacation and sick leave will have a negligible effect on the $8 billion deficit.

The one area where significant savings will be seen if Senate Bill 5 becomes law is in the limitations that are placed on the bargaining rights of public employees.

First of all, employees will not be able to negotiate on “the continuation, modification or deletion of an existing provision of a collective bargaining agreement.” This limitation on the ability of public employees to bargain means they will be starting from scratch. The ability to negotiate on health care and other fringe benefits is prohibited by Senate Bill 5. Senate Bill 5 only allows the public employer and public employees to negotiate on “wages, hours, terms and conditions of employment.” All other subjects are reserved to the public employer and are nonnegotiable. Senate Bill 5 goes on to further limit the ability of public employees to negotiate in good faith in that the employer only need to make one offer, basically on a take-it-or-leave basis. If the two sides are then not able to reach an agreement within a specified time, the impasse is then submitted to the State Employment Relations Board, which will appoint a fact finder. If the two sides are not able to reach an agreement after the fact finder’s report, the proposals of each side are submitted to the legislative authority or school board in the case of schools, which would then select the proposal it deems best and that proposal would then become a binding agreement for three years. There is some additional language where the voters of the municipal entity or school district would actually vote on the proposals of the two sides. But I feel that is a very unlikely scenario that I very much doubt we will see take place. All in all, this process would only take place as contracts come up for negotiation and would take time to come to fruition. These processes, along with the elimination of the right to strike, severely limit the ability of public employees to bargain collectively. There are other facets of Senate Bill 5 such as privatization of services and the rights of public employers to void agreements when under a fiscal watch or fiscal warning that could result in cost savings but once again they would be problematical and only at a future date. All in all, the impact of Senate Bill 5 upon public employees will set back employer and employee relations 50 years realizing little immediate cost savings.

The impact of Senate Bill 5 upon police and fire personnel, along with school teachers, effectively takes away their basic rights. It eliminates binding arbitration for police and fire personnel; the only recourse to resolving differences with their employers that they had under current law. The police and fire personnel, the very people we depend upon to protect our property, ourselves and the rights that we cherish will be denied some of those same rights under Senate Bill 5. Our teachers, upon whom depends the future of our children and hence the future of our society, would be relegated to the status of second-class citizens. The very fabric of our society is dependent upon the police and fire personnel along with teachers and school employees.

While the immediate cost saving benefits of Senate Bill 5 are questionable, the long-term negative consequences of its taking effect are certain.

For those who are interested, I will once again provide a link to the entire bill as passed.

This link is for a summary of Senate Bill 5 prepared by the Ohio Legislative services commission.

I will gladly respond to any comments as long as they are civil, don’t involve name calling or inappropriate language.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Victor Mooney November 03, 2011 at 02:07 AM
Mr Messinger: Next, you will be telling us that SB5 will have an effect on the price of eggs in China---Have you no shame?
Adam C. Miller November 03, 2011 at 03:54 PM
Quality teachers have nothing to fear from a merit-pay system. Poorly performing teachers do not deserve a raise...
william November 03, 2011 at 06:06 PM
Adam, what is a poorly performing teacher ? I think we should give the teachers pay by how many A's their students get. Yeah that would work !!!!
Neil Messinger November 03, 2011 at 07:19 PM
Mr. Mooney, ...Good debate tactic.......... But wouldn't you want 3 riding with you?
Susan Ruiz Patton November 09, 2011 at 09:21 PM
A user has been suspended for using an alias. Our terms of use prohibit that. http://avon-oh.patch.com/terms

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