Lawmakers hear divided testimony on bill to ban employer "pension pickups"

At a third hearing on House Bill 473, the Ohio House Public Insurance and Pensions Committee heard more than a dozen witnesses on whether to ban employer "pension pickup" contributions, a practice where local employers pay part or all of an employee—s required retirement contribution. The hearing opened with testimony from teachers and public-safety unions who warned the ban would weaken local bargaining and worsen staffing shortages; think tanks and policy groups said a ban would improve transparency and fiscal accountability.

William Boone, introduced to the committee as representing the Berea Federation of Teachers and testifying on behalf of the Ohio Federation of Teachers, told lawmakers: "How does this help address the teacher shortage crisis? ... It doesn't." Boone said pension pickups "are negotiated tools that local school boards and unions use to attract and retain qualified educators," and argued banning them would remove a flexible compensation option used after years of limited raises. He cited "more than 15,000 unfilled education positions statewide" as part of his concern about recruitment and retention.

Robert Davis, government relations representative for the Ohio Education Association, said the bill would "prohibit public employers from picking up employee pension contributions" and warned that eliminating pickups could produce a "14% reduction in net pay" for employees who currently receive a full pickup unless local employers raise base salaries. Davis walked the committee through a hypothetical where an employer paying a 14% pickup would instead need to raise salary to keep employees whole, raising other salary-based costs such as Medicare, taxes and leave payouts.

Representatives of school boards and administrators echoed those warnings. Paul Limhoff of the Buckeye Association of School Administrators said pickups are "a key recruitment and retention strategy, especially when competing with neighboring states and the private sector," and argued that removing pickups would produce long-term fiscal pressure as districts increase base pay to avoid take-home pay reductions.

Public-safety unions and retiree groups also opposed the bill. Michael Wyne of the Fraternal Order of Police said his union covers dozens of bargaining units that have negotiated pickups, and argued the practice helps employers avoid layoffs or higher insurance costs. A representative of the Ohio Association of Professional Firefighters told the committee that the bill would "substitute state judgment for the will of local governments and their employees" and called the proposal government overreach.

Witnesses and members debated how widespread pickups are. The Ohio Education Association said pickups are not widespread across its 700 locals and estimated "under 20" locals currently have pickups, while other witnesses gave broader anecdotal estimates ranging from 3% to 5% of traditional employees in some contexts. Committee members pressed witnesses on the mechanics, including the distinction between employer-paid pickups, salary-reduction pickups, and "pickup on the pickup" arrangements used in some executive contracts.

On the other side, policy advocates framed the bill as a transparency and taxpayer-protection measure. Greg Lawson of the Buckeye Institute said existing contract data are diffuse across CERB and SIRS and that reporting salary amounts directly would be easier for taxpayers to understand. Alan Smith of the R Street Institute urged the committee to view HB 473 as a prospective ban that would respect existing contracts but prevent future pickup arrangements, saying the ban would "simplify pay reporting and improve confidence in Ohio's pension system."

Throughout the hearing members raised practical questions about implementation and local control. Witnesses repeatedly said data on how many employees receive pickups is limited and suggested improved public reporting as an alternative to an outright ban. Multiple witnesses urged legislators to consider targeted transparency measures that would make pickup arrangements easier for the public to find without eliminating local bargaining tools.

The committee did not vote on HB 473 at the hearing. Chair Peterson adjourned the session with no formal action taken and no next meeting date announced.