OKLAHOMA CITY – For the second time in two months, state lawmakers were told this week that reforms enacted this year have resulted in significant improvement to a state pension plan.
Thanks to legislative reforms, the Oklahoma Public Employees Retirement System’s unfunded liability has been slashed by approximately $1.7 billion, officials told members of the Pension Oversight Committee today.
“Oklahoma has just saved more than a billion taxpayer dollars. That's thrilling, to say the least,” said House Speaker Kris Steele, R-Shawnee. “Pension reform in Oklahoma has been and will continue to be about using taxpayer dollars in a responsible way that gives public workers what they were promised while ensuring state government is fiscally healthy. I’m pleased we have leaders like Representative Randy McDaniel and others who plan to remain committed to this cause next session and beyond. Much work is left to be done, but we’re off to a great start.”
“Today’s good news is further confirmation of the importance of the pension reforms enacted earlier this year,” said state Rep. Randy McDaniel, an Oklahoma City Republican who chairs the House Pension Oversight Committee.
“We are very pleased with the progress for the Teachers Retirement System so that our teachers can feel very confident about their future retirement income,” said state Sen. Mike Mazzei, R-Tulsa.
Last session legislation was approved that reduced the pension plans’ unfunded liabilities by billions. The measures making the largest impact so far on OPERS have been House Bill 2132, by Steele and Senate President Pro Tempore Brian Bingman (R-Sapulpa), which required a funding source before cost-of-living adjustments (COLAs) can be granted, and Senate Bill 794, by Mazzei and McDaniel, which increased the retirement age for future employees.
Following those reforms, officials with OPERS said that system’s unfunded liability has fallen by $1.7 billion and its funded ratio has improved from 66 percent funded to 80.7 percent.
“OPERS’ actuarial report approved by our Board of Trustees today shows dramatic improvement in the retirement system’s financial condition,” said Tom Spencer, executive director of OPERS. “The biggest single factor for the improvement was the passage of House Bill 2132. Representative Randy McDaniel and Senator Mike Mazzei deserve a lot of credit for getting this legislation passed. Doing away with unfunded cost-of-living adjustments to pensions is a common-sense reform showing that Oklahoma state government must live within its means.”
Spencer said the system also benefited from two straight years of double-digit investment returns, earning 13.8 percent in FY 2010 and 21.2 percent in FY 2011.
Officials with the Oklahoma Teachers Retirement System recently announced similar system improvement and credited reform measures as a major factor.
While undoubtedly pleased with those reports, McDaniel noted that several state pension plans continue to have financial challenges.
“The reforms are working profoundly. Debts are declining significantly while assets are expanding. Nonetheless, the cash-flow analysis clearly depicts the need for additional reforms in order to put all the state pension plans on a pathway to sustainability,” said McDaniel, who has 20 years of experience in the financial services industry.
Following the enactment of this year’s reforms and strong investment performance, the state’s major pension plans now have $21.5 billion in assets and have reduced their unfunded liabilities by billions of dollars.