The city of Portsmouth is going to have to pay nearly $300,000 into the Ohio Police and Fire Pension Fund. A dispute arose when the fund cited the Ohio Revised Code in informing the city that pay the city thought was not pensionable, was, in reality, pensionable.
The issue was 120 hours that is paid to fire department employees that is over and above the holidays that the firefighters work.
“The way we look at it is it’s a bonus,” Portsmouth Auditor Trent Williams told the Daily Times. “If they’re already working on the holiday, the pension is being paid on that day that they are being paid for, we’re not understanding how that could be paid as pensionable wages again after it’s already paid once as pensionable wages. That’s what it comes down to.”
The officials at the fund didn’t see it that way.
Mary Beth Foley, General Counsel, for OP&F, said, in correspondence with the city – “The employee contributions must be deducted from the employee’s ‘salary,’ which is defined in Ohio Revised Code Section 742.01 as ‘all compensation, wages, and other earnings paid to an employee by reason of employment,” Foley said in her correspondence. “‘Terminal pay,’ which is not included in the calculation of salary, is defined in Ohio Revised Code Section 742.01(K)(2) as including payments deferred more than one year compensating the employee for holidays worked.” (emphasis added).”
Foley went on to say – “The city’s assertion that the payments are terminal pay is without merit. You have indicated most employees cash out the leave in the year it is earned.”
Now a figure has been determined.
“It looks like we owe it,” Portsmouth Solicitor John Haas told the Daily Times. “We went up and met with the Pension Board last week and it’s due and payable.”
There had been a wide gulf between what Williams believed the amount to be – $200,000 and what City Manager Derek K. Allen estimated – $500,000.
“The last number I heard – and I’m not involved in the math – was $285,000,” Haas said. “I’m not involved in that part of it. I was just there to have them explain to me why it was pensionable.”
Once Haas heard the explanation, he tended to not dispute their finding.
“It comes down to the wages were paid to them in the year they were earned, so they’re pensionable,” Haas said. “Had firefighters been able to bank them, and they were paid in a later year, that payment would not be pensionable. But because it was used in the year it was earned, it’s pensionable.”
Haas said it comes down to the definition of what is not salary. That definitely talks about “unused” benefits, and when those benefits are used. He said, once you look at it in that context, it is salary and, thus pensionable.
Haas said the city of Columbus has the same thing in their contract and passed a resolution making that payment pensionable and have always paid into the pension fund for such payments.
There is, at least, some good news for the city.
“The board itself realized it’s one of those things that is a close call, so they’re waving any penalties or interest on it,” Haas said. “That cost them (OP&F).”
What effect will it have on the city’s delicate budget balance?
“It is not the final number but is the calculation from the Auditor’s office,” Allen said. “It is 100 percent General Fund and it will drop our fund balance by that amount.”
Reach Frank Lewis at 740-353-3101, ext. 1928, or on Twitter @franklewis.