In the last few months, it has come to the attention of the Auditor of State’s office that there is some confusion surrounding Ohio Public Employees Retirement System (OPERS) benefits for elected township officials — specifically “pick-up” plans.  To help clarify and answer some questions, our office wanted to outline the rules pertaining to this issue and what the office looks at during a regular financial audit.  Our hope is that this information helps you plan for your future budgets and your next audit.

OPERS pick-up plans enable employers to pay, or pick up, mandated employee contributions for members of the retirement system.  A pick-up plan offered by a public employer is generally considered a fringe benefit unless it is offered as a “salary-reduction pick-up plan.”  Township employees whose compensation is not set by statute may participate in such a plan without a corresponding salary reduction.¹

Ohio law has long held that, when an elected official’s compensation is set by statute, the official is not entitled to receive fringe benefits that are not statutorily provided.2 The compensation of township trustees and fiscal officers is set by Ohio Rev. Code Sections 505.24 and 507.09, respectively.3 Similarly, their fringe benefits (which are a form of compensation) are also set by statute.4 In order to participate in a pick-up plan, the trustee or fiscal officer’s salary must be reduced by the amount of the pick- up.  By doing it in this manner, the pick-up would not be considered a fringe benefit, rather an alternative method for the township to account for the official’s salary.5

In the course of an audit by the Auditor of State’s Office, auditors will look for a corresponding salary reduction for any trustee or fiscal officer participating in an OPERS pick-up plan. If a township is found to have offered such a plan to its elected officials without making a corresponding salary reduction, the Auditor of State’s Office will issue findings for recovery for amounts picked up by the township.  The findings for recovery would date back to the beginning of the township’s last audit period.

Additionally, it is important to remember that Ohio ethics laws prohibit a public servant from accepting or giving compensation other than that which is allowed by law to perform the public servant’s official duties.⁶ The Auditor of State makes referrals to the Ohio Ethics Commission for any township elected official who participates in a pick-up plan without a salary reduction or who votes to offer such a plan to elected officials. If you are planning to offer or have offered an OPERS pick-up plan to your township’s elected officials, it is a good idea to review these issues with your legal counsel.7

We hope this information proves to be useful and answers any questions you may have.  As always, if you have any additional questions or concerns, please do not hesitate to contact the Auditor of State Regional Office that serves your entity.  We look forward to continuing our work with Ohio’s townships to best serve the citizens of our great state.

^{1. A township may offer its employees an OPERS pick-up plan by either reducing the salary the employee receives or as a pick-up in lieu of a salary increase. 1984 Op. Att’y Gen. No. 84-036 ?}

^{2. 2011 Op. Att’y. Gen. No. 2011-026 citing 2004 Op. Att’y. Gen. No. 2004-048 ?}

^{3. The compensation of a township fiscal officer assuming additional duties is also set by statute. See, e.g., ORC Sections 505.32, 515.12 and 519.16 ?}

^{4. See, e.g,. ORC Sections 505.60 and 505.601 and 1981 Op. Att’y Gen. No. 81-052 ?}

^{5. 1984 Op. Att’y Gen. No. 84-036 and 1984 Op. Att’ Gen. No. 84-058 ?}

^{6. ORC. 2921.43(A)(1) ?}

^{7. The Internal Revenue Service and OPERS should also be contacted for assistance in implementing a pick-up plan. ?}