State employee groups say major pension changes would be ‘devastating’

altA group of state government
workers, the Public Pension Coalition, 
called on lawmakers to avoid steps to diminish benefits in connection
with announced plans to reform Oklahoma’s troubled pension systems.
After the coalition’s press briefing today, a leading advocate of
sweeping reforms spoke with reporters in behalf of what he has termed “a
solution” to the state’s looming pension crisis.

The first event brought together several public employee groups, led by
Phil Ostrander of the state Firefighters Association, Clifton Ogle of
the American Federation of Teachers and Scott Barger of the Oklahoma
Public Employees Association. Leaders of the coalition seemed to agree
that significant changes in pension benefits provided to state employees
would be “devastating” to morale among state workers.

Members of the coalition were reluctant to name possible budget cuts
that could provide revenues for deposits into the state’s pension funds.

However, in response to a question from CapitolBeatOK, Ostrander said
abolishing or limiting business and other tax credits might free up some
revenues. However, Ostrander and others in attendance stressed they
were “not necessarily advocating” any changes. Ostrander said budgeting
was “a matter of priorities,” and that keeping pension promises to
employees should be a priority.

Barger said “raising employee contributions at this time is premature.”
Some analysts have said that might be necessary to keep the programs
solvent. Participants argued they did not not want changes in the
pension system to fund tax credits. Ostrander, in his prepared remarks,
said, “The firefighters pension system has indirectly funded millions of
dollars in tax credits. We may now be facing benefit reductions because
of a low-funded ratio. It doesn’t seem fair to us.”

Providing a context establishment of the Public Pension Coalition is the
announced intention of House Speaker-elect Kris Steele of Shawnee to undertake major pension reforms.

The state’s system is deeply troubled, particularly the Oklahoma Teacher Retirement System (OTRS) which has been put among the two or three worst funded systems in the country.

The Pew Center
on the States and other analysts have painted a grim picture for public
pensions in general, and Oklahoma’s system in particular.

Darkening that picture is the fact that other studies have said the challenges ahead for teacher retirement systems are even worse than has been reported in recent years.

The Institute for Truth in Accounting,
in detailed earlier this year by CapitolBeatOK, placed Oklahoma’s total
debt at $14,600 per family. Some states are even worse.

Attendees at today’s briefing at the state Capitol told reporters they
opposed “balancing the budget on the backs of Oklahoma workers.” They
oppose reduction or elimination of retirement benefits, and say they
intend, in the words of a statement circulated to reporters, “to work
with the Legislature to ensure the state honors its commitment to public
employees and retirees who have dedicated their careers to making
Oklahoma better place to live and work.”

Members of the coalition include these state associations: Firefighters,
retired Firefighters, Professor Firefighters, Fire Chiefs, Troopers,
and Retired Educators. Others participating were the AFT (AFL-CIO) and
the Oklahoma Public Employees Association (OPEA). 

Another approach to the pension situation came from Steve Anderson, a
certified public accountant and former budget analyst during the
administration of former Governor Frank Keating. Anderson presented
ideas included in an essay forthcoming in Perspective magazine, monthly
publication of the Oklahoma Council of Public Affairs (OCPA).

A linchpin of Anderson’s plan is that “all new teachers, support
personnel, and government employees will begin their employment in a
defined contribution plan instead of the defined-benefit plan that OTRS
and OPERS currently use.” The plan would require no matching payments by
employees. The state would provide 4 percent initially, increasing by 1
percent a year until reaching a full 9 percent after five years.

The core of the Anderson plan is to “cash-flow out” the debt now in the
system. He said the plan would pay off debt over time without an
infusion of new money, and free up $300 million for state services in
the near-term.

Anderson has referred to the challenges ahead as “Oklahoma’s Pension Bomb.”