As part of continued work to reform Oklahoma’s pension system, House Speaker Kris Steele has ordered the formation of a select House oversight committee on pensions.
The committee will hear all House interim studies approved on pension matters. Among the issues up for review are how pension system investments have been handled, the way assets have been allocated from the pension systems and pension funding formulas.
“While this year has been a positive, defining one for pension reform, we know we must do more,” said Steele, R-Shawnee. “We have reason to believe past pension system investments and other financial policies may have further imperiled an already strained pension system in ways that warrant serious attention. This committee will determine precisely what problems exist and how Oklahoma can continue improving its pension system.”
Rep. Randy McDaniel, R-Oklahoma City, will serve as chairman of the bipartisan committee. Other committee members and details will be announced later this month.
“I am pleased to see the political debate surrounding pensions finally shift from pushing for additional unfunded benefits to taking responsibility for past promises and ensuring a vibrant future for all Oklahomans,” McDaniel said.
Steele said pension reform will continue to be a top priority in the House during the interim and next year.
“At its core, the pension issue is really about keeping the promises we have made to our thousands of valued state workers and ensuring overall fiscal stability across state government. We will continue doing exactly that with this committee,” Steele said. “Although those affected most directly by pensions are mostly state employees, the reality is that failure to stabilize the pension system has the potential to wreck fiscal havoc on all of state government. We refuse to let that happen, so we’re staying on the offensive to make Oklahoma’s pension system the best it can be.”
McDaniel has two pension-related legislative trips planned for this summer.
On June 21 and 22, McDaniel will visit the Pew Center on the States in Washington, D.C. to meet with other policymakers at a conference on public employee pensions.
On July 18, McDaniel will deliver a presentation on Oklahoma’s pension reforms at the Southern Legislative Conference’s annual meeting in Memphis, Tenn., which will be attended by legislators from across the nation. Several other states are facing pension system problems similar to Oklahoma’s.
“Rep. McDaniel’s requested presence at these conferences affirms that other states ought to consider Oklahoma’s pioneering approach to pension reform,” Steele said. “It shows we are not only doing something right, but doing it in ways that make others take notice. This is a major compliment.”
Steele plans to attend the SLC conference to support McDaniel’s presentation.
Oklahoma’s six major pension systems fund retirement pay for retired state employees, teachers, firefighters, police, law enforcement officers and judges. The overall system had an astounding $16 billion unfunded liability when the 2011 legislative session began.
In March 2011, Oklahoma’s 57 percent pension funding ratio was the third worst in the nation.
Faced with an unsustainable situation that had been ignored too long, the Legislature in 2011 made major pension reforms to ensure the state keeps the promises it has made to tens of thousands of retired employees.
When the 2011 reforms take effect, the unfunded liability is estimated to drop to about $10 billion and the overall stability of the system is expected to improve under the fiscally conservative new pension policies the Legislature developed this year.
Among the pension reform bills signed into law by Gov. Mary Fallin this year are:
House Bill 2132, which requires the Legislature to fully fund cost-of-living adjustments made to pension plans, reducing unfunded liabilities by about $5 billion;
Senate Bills 377, 794 and HB 1010, which increase the normal retirement age on various pension systems for those who join after Nov. 1, 2011, saving nearly $2 billion;
HB 1007, which requires a monthly transfer of revenues from a State Department of Education revolving fund to the Oklahoma Teacher’s Retirement System, improving the fiscal stability of OTRS and increasing the recognized state per-pupil spending amount;
SB 891, which requires school districts employing a retired member of the teacher’s retirement system pay the employee’s contribution when he or she returns to work for a school system;
SB 347, which requires a municipal employee to forfeit pension benefits if convicted of certain criminal activities related to the duties of his or her office.