As we continue our research into public finances, we discovered this information on the Lake County Auditor’s website. As you know, we are concerned about private citizens getting priced out of their homes because of increasing real estate taxes. This is less of a factor for citizens that are collecting a Public Employees Retirement since they have a built in cost of living increase (COLA) into their pension plans.
Here is an overview of OPERS from the audited statements of Lake County:
“For those retiring subsequent to January 7, 2013, the COLA will continue to be 3% simple annual COLA. For those retiring subsequent to January 7, 2013, beginning in calendar year 2019, the COLA will be based on the average percentage increase in the Consumer Price Index, capped at 3%. ”
There is a very important issue that requires us to ask more questions. It deals with “net pension liability”. The governing body for reporting requirements (GASB) now requires that all political entities report all future pension liabilities on their balance sheet. (Remember a balance sheet is a form that reports the entity’s assets and liabilities, and reports the financial strength of the entity at a given point in time.)
As of December 31, 2015, Lake County’s net pension liability was $74,172,952. If you think that is a lot of money, as of December 31, 2016 it increased to $106,151,474! Prior to the change in reporting requirements, this amount went undisclosed. Here is the page detailing those amounts:
Net Pension Liabilities 2015 and 2016
There is a debate who’s obligation it is to pay these future pension liabilities.
“Ohio Revised Code limits the County’s obligation for this liability to annually required payments.” (This is the old method of reporting the County’s obligation.)
“GASB 68 assumes the liability is solely the obligation of the employer, because (1) they benefit from employee service; and (2) State statue requires all funding to come from these employers.” (This is the new method of reporting that is causing a great deal of concern throughout Ohio.)
Here is the source of the prior two statements: Net Pension Liabilities
As you can see, there are conflicting statements on whether it is the County’s or the State’s responsibility. However, we think we are safe in saying that ultimately it is the over-taxed taxpayers that will ultimately pay the bill. The only question is how will the government extract the money from the taxpayers.
We will keep you posted as we gain more insight on this huge problem.