Public Pension Concerns Growing

Concern is increasing daily about Tulsa and Oklahoma’s liability in pensions for public employees.  Union officials have been remarkably silent on the subject, but one Tulsa firefighter claimed recently on local talk radio, “After we have our [retirement] cake the City does not give our pensions another dime.”  From Tulsa Today’s analysis, the firefighter is telling the truth, but without the whole story.

The City of Tulsa contributes 13% of the gross salary for each paid firefighter during their employment, and the employee can contribute more if they wish.  During that same time and after they retire, the State of Oklahoma also contributes 34% of the taxes collected for Insurance Premium Taxes, as they have each year since 2006.  What this means is that while the City of Tulsa, may not have a direct liability to fund the pension, Oklahomans will fund it, in part, through taxes forever.

According to the Actuarial Valuation Report for The Oklahoma Firefighters Pension and Retirement System, the firefighters statewide pension was carrying an unfunded liability of $1,407,100,000 ($1.4 billion) as of July 1,2009.  

Over $1.4 billion in unfunded pension liability – monies owed to enable the fund to pay out 100% of what is due by contract with participants.  This means that, as of 2009, the pension fund is only 54.2% funded.  But wait, there’s more.  In 2008, the state lost money from the investments that make up part of the pension fund.  In the report for fiscal year ending June 2008, the pension’s assets depreciated 26.8%, including a loss of $84,144,252 (over $84 million) in investments.

So, where does that leave us as citizens?  Can we fire someone?  Who?  Those who are getting the monies are the staunch working folks who safeguard our houses, personal safety and teach our kids.  The average firefighter does a job with honor and sacrifice.  The average teacher is there to mold young minds and prepare them for the real world.  Who then is to blame?  Who is to be held accountable?  Perhaps it is time to look at why we got into the public union business in the first place.  

Perhaps it is time to consider the words of Franklin Delano Roosevelt from The Constitution Prevails (pg. 325 Sec. 97), Strikes of Federal Employees:

“All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service.  It has its distinct and insurmountable limitations when applied to public personnel management.  The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.  The employer is the whole people, who speak by means of laws enacted by their representatives in Congress.  Accordingly, administrative officials and employees alike are governed and guided and in many instances restricted, by laws which establish policies, procedure, or rules in personnel matters.”

Thus FDR, known for huge government expansions, objected to unions for public workers.  Unions cannot function properly in government because the “Management” is all of us, including the workers themselves.  

At current standing, a Pew Center report puts our state’s total unfunded liability at just over $13 Billion dollars, and growing at a unfunded percent between 54.3% and 68.8%.  Most of this is from government workers in unions with negotiated pensions and funding rates in place by laws.  It isn’t a question of if we will run out of money to pay these promised pensions, it is simply a matter of when.  

It is significantly relevant to also consider SQ744, an education spending question promoted by unions on the ballot this November which would mandate that Oklahoma spend as much in education as an average of states in the surrounding area.  According to a Pew Center study, Kansas is second worst in the nation in regard to pension funding problems, only surpassed by President Barack Obama’s home state of Illinois.

This study titled “The Trillion Dollar Gap” outlines the difference between what is owed in pensions, and health benefits, and what the states have in cash in the funds to pay the debts.  The study outlines the worst states and the best states and Oklahoma is in the bottom 21 with the funding being less than 80%.

Patrick McGuigan, editor of has done several reports lately on the pensions for the teachers in Oklahoma.  In a brief telephone interview with Tulsa Today McGuigan reported that the 80% funding mark is the actuarial industry standard for when a fund is either healthy or in trouble.  

McGuigan said, Oklahoma’s pensions “are in a lot of trouble” if Oklahoma’s economy declines, some natural disaster or other financial emergency occurs that reduces tax revenues.

About the author:
Aaron Sheppard is a long time believer in small government and responsible use of tax dollars.  As a former City of Tulsa employee who worked in the Finance Department assisting in production of the Annual City Budget from 2001 to 2004, he experienced first hand the differences in what happens behind the scenes and what makes the news.  He has a Bachelor’s degree from the University of Phoenix and has worked in the private sector since 2004.  You can read more from him on his blog at and on Tulsa Today.