Is Cincinnati Pension Reform Stabilizing the System — or Positioning It for OPERS?

Cincinnati recently announced that for the past year, it has been in mediation concerning the 2015 collaborative agreement.

This agreement requires the city to fully fund the Cincinnati Retirement System (CRS) by 2045.

The system currently has a funded ratio of 68%. Furthermore, it has an $847 million liability to erase. Cincinnati pension reform is a key topic as the city considers how to address these financial challenges.

Under the mediated agreement, the city will make a one-time $50 million contribution. This will be followed by an additional $50 million over time, along with increases to its annual contributions. In return, employees’ payroll contributions will increase from 9% to 10%. Additionally, the deadline for full funding would be extended to 2049. The agreement must still be approved by the federal judge overseeing the collaborative agreement.

The initial $50 million comes from earnings taxes collected during the pandemic. Those funds had been set aside in case Cincinnati lost litigation over whether it could continue taxing employees who were working remotely outside city limits. The Ohio Supreme Court upheld the authority of Ohio cities to retain those taxes. As a result, Cincinnati now plans to apply that reserve to the pension deficit.

On its face, this appears to be progress. However, it raises a broader structural question: Is Cincinnati pursuing pension stabilization — or quietly positioning the system for a future transfer?

Cincinnati Pension Reform and the CRS Funded Ratio

Even with the mediation changes, the CRS-funded ratio remains well below full funding. The amended agreement modestly improves the trajectory, but it does not eliminate the pension liability.

For more than a year, discussion has included recommendations from the Cincinnati Futures Commission to explore structural reforms. One major proposal involved regionalizing the Greater Cincinnati Water Works (GCWW). The idea was framed as a way to generate a large one-time capital infusion. That could potentially be hundreds of millions of dollars and could significantly improve the funded ratio.

Improving the funded ratio to a higher level could make a transfer into the Ohio Public Employees Retirement System (OPERS) more feasible.

For that to occur, voters would first need to approve GCWW regionalization in a referendum. OPERS would then have to agree to integrate CRS. While the CRS Board has referenced the Futures Commission’s recommendations in meeting minutes, there has been no publicly recorded vote or formal trustee position on a transfer to OPERS.

GCWW Regionalization and a Potential OPERS Transfer

Regionalization would transfer the waterworks to a newly created, independent regional authority serving the broader metropolitan area. GCWW would no longer operate as a city department.

According to the Commission’s framing, the city could receive hundreds of millions of dollars in exchange for transferring waterworks assets to the new authority. That capital could materially reduce the pension liability. Additionally, it could alter the long-term structure of public pension funding in Cincinnati.

This is where Cincinnati pension reform intersects with a broader governance question.

Is the Futures Commission’s recommendation now off the table because of mediation? Or does the mediation agreement simply adjust timing while structural options remain under consideration?

Will voters eventually see a ballot measure regarding GCWW regionalization? Or has the city committed to maintaining CRS as a locally administered system under the collaborative agreement framework?

If the intent is to preserve and fully fund the current system locally, that should be stated clearly.

Transparency and Structural Pension Decisions

At present, several basic questions remain unanswered:

• What triggered the mediation process?

• Did actuarial projections materially change?

• How much does the funded ratio improve under the amended agreement?

• Does an OPERS pathway remain an active policy option?

These are not partisan questions. They are structural questions about long-term obligations and governance.

Cincinnati has recently announced major initiatives only after they were well underway. Examples include the sale of the Cincinnati Southern Railway, Connected Communities, and multi-million-dollar capital expenditures such as the Center Hill Solar Array.

When large financial commitments emerge from a mediation process that was not publicly announced, it reinforces the perception that major structural decisions may be occurring outside direct public debate.

Allocating Pandemic Tax Revenue to the Pension

Other than returning the $50 million to taxpayers, allocating it toward pension stabilization is likely the strongest immediate use of those funds.

The additional $50 million commitment and increased annual contributions are positive steps for employees and pensioners. This remains true even with the 1% increase in employee contributions.

However, the mediation does not eliminate the pension liability. It modestly improves the timeline.

If the Futures Commission’s structural proposals are being rejected, residents should be told directly. On the other hand, if GCWW regionalization and an OPERS transfer remain viable options, that should also be communicated clearly.

Long-term pension policy requires transparency.

Read More

Citizen Watchdog: One Year of Tracking Cincinnati City Hall