|Rep. Mark McCullough|
The total unfunded actuarial accrued liability of all seven Oklahoma pensions systems is over $16 billion – about $4,275 per Oklahoman and more than twice the size of the entire state budget.
Oklahoma’s major pension systems are only about 60 percent funded on average. The most recent information available for the firefighters’ plan shows a 53.4 percent funded level. For police, it is 74.9 percent.
The actuary soundness for a private plan is a minimum of 80 percent.
The soundness of all major plans has declined over the last decade, and Oklahoma ranks among the worst five states in the nation according to the Pew Center on the States.
House lawmakers are committed to enacting reforms that will begin to shore up the system so retirees are protected and other citizens are not unfairly punished.
As part of that effort, I have introduced House Bill 1221, which deals with the Oklahoma Firefighters Pension and Retirement System, and the Oklahoma Police Pension and Retirement System.
In its current form, House Bill 1221 would adjust benefit levels for new workers entering the system starting in November 2011. Benefits for current firefighters or police would not be impacted.
The bill, which passed out of committee this week, contains four major changes for new members entering the system. First, it would change the multiplier from 2.5 percent to 2 percent. The bill would increase the retirement age for those entering the system starting next year so retirement would occur in 25 years instead of 20. It would also raise the employee contribution from 8 percent to 12 percent. And, finally, the bill would eliminate the Drop plan, which impartial and independent research indicates is a fiscal drain on the pension system.
I believe this is a fair way to begin reform. Promises made to current firefighters and police officers would be kept, and those entering the profession in the future would do so with a clear knowledge of promised benefits.
This bill is only an initial proposal. I will be meeting regularly with all concerned parties throughout session. We will work hard to craft a plan that is financially sound, but also fair and attractive to future police and firefighters.
I appreciate the firefighters who visited the Capitol this week to express their views, especially those from Sapulpa. It was a great example of democracy in action.
This is the first major legislative acknowledgement of the need to address structural funding problems in our police and fire pension systems.
By making specific adjustments today, we can chip away at the unfunded liability while dealing with beneficiaries in an open and transparent way that allows them to properly plan for retirement.
This process will not be easy or pain free, but if we do not act now, the pension plan for crucial public state employees will be in peril. This is a result that none of us should find acceptable.
State Rep. Mark McCullough, R-Sapulpa, represents the people of House District 30.