The Ohio Patrolmen's Benevolent Association (O.P.B.A)

Merry Christmas or Happy Holidays...whatever it is you may celebrate.

Relatively slow month being the last meeting of 2012. Things will rev up in the new year beginning with work on disability grants and the coordinated benefits associated with such grants. We have special meetings planned for February and April to address these issues. We anticipate that the OR5C will address this issue next year so we would like to be proactive in our work and see if we can establish some type of reform. We think that the ORSC will look at all the systems as a whole but ours always stands out when it comes to disability grants. We currently have one of the highest disability grants in the country amongst police and fire pension funds. We believe they will look at the process and coordination of benefits as their priority.

Wachtmann will head up the OR5C for 2013 ...great, he is a knucklehead so who knows what he will be planning. Good news is that he is done after two years as he will be termed out. Keith Faber is out of the OR5C, he will be taking a new role somewhere so he will not be on this committee. There was no OR5C meeting in December as they were in lame duck session. Meetings will start up again in January.

Buck and Associates, our actuary presented us with a "preliminary study" which implemented the changes that will occur from 5B340. The good news that comes from this is that with the changes and the investment returns we have gathered since the downturn we are making significant headway in the right direction. Although we may be a little short of our 30 year funding, we will be very close. We still have to let the changes go into effect and we will revisit this study in 2017 to see where we are at before addressing any further changes. We anticipate our investment returns for 2012 to be in the vicinity of 12+% but of course I will not
know the exact number until January 1st.

Although not in Ohio yet, obviously we are all aware of the right to work initiative that has been passed in Michigan. Kasich was quoted as saying that it was not on his agenda or the legislatures agenda in Ohio for the immediate future. Kasich believes that the 5tate is moving in the right direction and that this does not need to be addressed to move us ahead. With that being said, there is a private group gathering signatures to place this issue on the ballot and it appears that they may have enough to get it there. I know it has nothing to do with the pension system but we have to be aware of this because we may be dealing with it again. AQuinnipiac pole has shown that Kasich's approval rating is at a whopping 42% and with his re-election campaign starting in 2013 it will be important to keep an eye on how he moves along.

We did pass as a board new language for the "anti-spiking salary language" that appears in the changes to 5B340. Moving forward, the process of promotions will not be subject to the anti-spiking elements written in the bill. Natural promotions will have its own language and not subject to any spiking clause. The overtime accrued with promotions will be subject to the cap but if your salary alone puts you over the cap, you would not be subject to the cap. Again, this is only for promotions of rank within or outside of your respective departments. The vote passed closely 5-3 and ,was a very difficult and debated topic amongst the trustees. We will be working on the health care subsidy linked to years of service in 2013 and the parameters surrounding that. I will let you know what we decide for spousal benefits and other items that create issues with this change. We will be addressing this at our special meeting in February. As it still stands, health care will be paid at a rate of 3% per year (member) and 1%per year (spouse) with a total of 75% and 25% respectfully for 25 years of service. This is the cap, so if you work 26 +years it will not be more. This was the last meeting for Bill Estabrook and Kay Penn. They were very good for our fund and will be missed. If you had the pleasure of meeting any of the two or needed them you will know what they did for this fund. John Gallagher and Jennifer Harville will be taking their positions respectively. John will be an excellent fit and Jennifer has been with the fund for 15 years. Both will do an excellent job.

Thanks for your support during the year, 2012 was challenging with the implementation of 5B340 and the changes we had to endure. Although it was not easy at times to swallow and even more challenging being a board member explaining various things, I appreciate the patience and hopefully this will be a good start to a great 2013 for everyone.
Take care,
Scott Huff


Questions Answered

Will Your Social Security be Reduced by the Windfall Elimination Provision?

As many of you may already know, the majority of Police Officers and other public employees in Ohio do not pay into Social Security.  However, you may have had previous work in the private sector or continue to work part time jobs where you are paying into Social Security.  If you are going to receive a pension from a job not covered by Social Security, but have paid enough Social Security to qualify for a retirement benefit, your benefit will likely be reduced by the Windfall Elimination Provision (WEP).

How does Social Security work?

Social Security benefits were created to replace only a percentage of a worker’s pre-retirement earnings. It is set up so lower-paid workers would get a higher return than highly paid workers. For example, lower-paid workers could get a Social Security benefit that equals about 55% of their pre-retirement earnings. The average replacement rate for highly paid workers is only about 25%. 

To understand why this is, you need to know how your Social Security benefit is calculated.  Your benefits are based on your average monthly earnings adjusted for inflation.  Then, they separate your average earnings into three amounts and multiply the amounts using three separate factors.  In the case of a worker who turns 62 in 2012, the first $767 of average monthly earnings is multiplied by 90%; the next $3,857 by 32%; and the remainder by 15%. The sum of the three amounts equals the total monthly payment amount.  The 90% factor is the most important and is what can be reduced by the WEP.

How does the Windfall Elimination Provision affect my benefit?

First, we need to verify that you are eligible for Social Security benefits.  The government no longer mails statements to those under the age of 60 as a cost cutting measure.  However, you can access your benefit calculation on the www.ssa.gov website by creating a user name and password.

Generally, you need 40 “credits” to be eligible for benefits.  In 2012, you receive one credit for each $1,130 of earnings covered under Social Security, up to the maximum of four credits per year. Each year the amount of earnings needed for credits goes up slightly as average earnings levels increase.  We here at Lineweaver Financial can calculate your earned credits for you.  

The WEP reduces the “90% factor” discussed above.  In the example in the previous section, instead of multiplying your first $767 of earnings by 90%, you would multiply it by only 40%, thus reducing your benefit by $383.50.  In 2012, if you retired at age 62, $383.50 per month is the maximum your Social Security benefit could be reduced by the WEP.

Exceptions to the WEP

There are exceptions, however.  If you are receiving a relatively low pension, the WEP cannot reduce your Social Security benefit by more than 50% of your pension.  So if you were to receive a $500 per month pension, the maximum reduction to your Social Security benefit would be $250 per month.  WEP does also not affect survivor’s benefits.

There is also the “Substantial Earnings” test.  If you have 30 or more years of Substantial Earnings under Social Security, you won’t be faced with the WEP at all!  Unfortunately, this isn’t an easy task for public employees to accomplish.  To pass the “Substantial Earnings” test in 2012, you need $20,475 of earnings under Social Security; however, in 1990 you only needed $9,525 in covered earnings. Also, if you have between 20-29 years of substantial earnings, you will face less of a reduction from the WEP, with each year of substantial earnings having a different reduction percentage.  Lineweaver Financial will be glad to help you calculate your “substantial earnings.”

Start planning now

Everyone can be affected differently by the WEP and other provisions regarding your Social Security.  The key is to plan ahead and seek advice from a professional if you want help.  We try to educate individuals of all ages, and these provisions can affect many people in the public sector.  With all the changes you are experiencing with your public pensions and work environment, it is important to be well educated and well versed on how you can proactively plan a comfortable retirement, regardless of how old you are now.  If you’d like more information or a complimentary analysis, feel free to give us a call.

Source: ssa.gov
Lineweaver Financial Group
9035 Sweet Valley Drive
Valley View, OH 44125
Securities Offered Through Sigma Financial Corporation. Member FINRA/SIPC


What is Felony Vandalism?

By:  Prosecutor Sherri Bevan Walsh

We recently had a case in which the defendant caused damage to a jail after being arrested on misdemeanor charges. While in custody, the defendant urinated throughout the cell and broke the smoke detector and fire alarm, causing the entire jail to be evacuated.

Certainly that sort of damage to government property would warrant a felony charge, right?

The answer depends on two factors: necessity to conducting business and monetary value. First, is the damaged property so crucial that the agency would be forced to shut down without it? And second, is the cost to repair the damage at least $1,000? If the answer to either of those questions is yes, then the perpetrator can be charged with felony vandalism.

According to Ohio law, vandalism is serious physical harm to an occupied structure or its contents. The property must be owned by either a business or a government, and the damage must be reasonably expected based on the actions of the person doing the vandalizing. For example, one can reasonably expect damage from hitting a window with a sledgehammer. One would not expect damage, however, from slamming a door with a glass window in it.

Vandalism can only be charged as a felony if the damaged property is necessary for the operation of a business or government agency or the cost to repair the damage is at least $1,000. If the damage does not meet either of these requirements, the suspect would face misdemeanor charges of criminal damaging (a misdemeanor of the second degree) and/or criminal mischief (a misdemeanor of the third degree). Criminal mischief is a misdemeanor of the first degree if the damage creates personal harm.

Necessity can be a point of contention between the victim and the legal system. In the eyes of the law, not every object used in the course of business falls into the necessary category. Necessary means the business or agency could not operate without it. For example, a dentist cannot conduct his business without his drill. If one of his windows is broken, on the other hand, he can still see his patients.

Because one of the criteria for felony vandalism is the cost to replace, repair and/or clean the damaged property, it is important to be able to calculate the monetary value of the damage. This is also important for determining the level of the felony. Vandalism is a felony of the fifth degree when the cost of repairs is less than $7,500. It becomes a felony of the fourth degree when the cost of repairs is $7,500 to $150,000. And vandalism is a felony of the third degree if the cost of repairs is more than $150,000.

Damage to an individual’s property that is not used in business or to an unoccupied structure does not constitute vandalism. Both of these would fall under criminal damaging. Depending on the surrounding circumstances and how the property was damaged, there could also be felony charges. For example, setting fire to an abandoned house would result in arson charges. Destroying someone’s flat-screen TV and living room furniture, although likely to cause more than $1,000 in damage, would result in burglary charges. Breaking the engine in a motorboat sitting in someone’s driveway, though, would only result in criminal damaging charges.

Simply being government property is not enough to elevate a vandalism charge from a misdemeanor to a felony. However, some courts have ruled that law enforcement property is necessary for doing business. Therefore, there is an argument that damage to jail cells, breathalyzers, cruisers and other items used by law enforcement do not need to meet the $1,000 threshold in order to warrant a felony charge. Damage to government property not valued over $1,000 is handled on a case by case basis, so you should consult your county prosecutor’s office.

The defendant mentioned at the beginning of this article was charged with and eventually pleaded guilty to Vandalism (F5), since the total cost to clean up the jail and repair all the damage was more than $1,000. However, by breaking the smoke detector and fire alarm, which caused the entire jail to be evacuated, the defendant effectively shut down the “business” of the jail. Arguably, this would also elevate his crime to a felony, regardless of cost.

This article is not to be considered legal advice. Please consult your police legal advisor regarding any legal issue.

Sherri Bevan Walsh

Summit County Prosecuting Attorney


Changes in Pension

By now you have hopefully been familiarized with the changes that will occur to your pension in the coming years.  If you haven’t you can familiarize yourself by logging onto www.op-f.org and reviewing the recently approved legislation and changes.  While over the last few weeks and frankly last few years the board and myself have been getting a little grief over these changes.  It is important to keep in mind the reasoning.  First, while change is unpopular it is needed to sustain the overall health of the fund.  Simply stating, we were paying out more than we were taking in, cost and life expectancies were continuing to rise and we could not simply sustain this trend.  While I cannot speak on the proposed changes first being presented to the ORSC and legislature I can speak on the fact that something needed to be done.  

I can also assure you at the time, the board that was in place was working with the best interest of the members in mind and that the changes that they chose would impact majority of the members least.  Those board members wanted to make changes that would have little or no impact on current retirees, minor impact on those about to retire with the ability for those to make certain adjustments and the most impact to those entering the profession or having ample time to make major adjustments.  The bottom line is whether supported or not change definitely had to occur to sustain the overall health of the Ohio Police & Fire Pension Fund.  Only time will tell whether these changes will work for a long and healthy retirement fund.

On another note, we have finally hired a replacement for our retiring Executive Director, William Estabrook.  John Gallagher was hired and comes to us as the Executive Director of the Chicago Police Pension Fund.  He has been with the Chicago Police Pension Fund since 1980 and has been the Executive Director since 2006.  He comes to us with a wealth of knowledge and the board is confident he will be an excellent predecessor to Mr. Estabrook.

Moving forward, the next task and issue that should be coming our way is disability pension reform.  We believe that the ORSC will make this a pressing issue in the years to come and ultimately look at addressing this growing debate.  To date we have one of the highest disability rates in the country with some 30% plus members retiring on disability retirements.  While our process is not in question and actually is one of the best in the country, the fact that our members become disabled according to our administrative policy at a high rate needs to be addressed.  I am not sure what the solution may be but I believe the board and staff will work with the ORSC to help refine this issue.  The reform itself may help the funding of the Ohio Police & Fire Pension Fund for future years.

Thanks for your support and should you have any concerns, comments or needs feel free to email me anytime.
Scott Huff
Trustee/Ohio Police & Fire Pension Fund
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