Reduce pension debt is listed as the No. 4 item on Oklahoma State Treasurer Ken Miller’s policy goals for 2014.
Oklahoma Educators Association and Keep Oklahoma’s Promises (a coalition of present and future pension beneficiaries) are expressing extreme misgivings about the stated plan.
This week is the filing deadline for all state legislation. Despite not knowing the full text of any bill pertaining to pension reform, activist groups and unions such as the OEA are fighting the concepts for change being discussed.
"First of all our pension system works," OEA President Linda Hampton said. "It is definitely not broken and the Teacher Retirement System has outperformed 99 percent of other systems in the United States and it’s in the best shape it’s been in 20 years."
In his Economic Report published Dec. 31, Miller outlined the problems he sees with the current structure of the pension program.
"Pension debt cannot be overstated in the conversation about creating a new pension plan for future public employees. In addition to the current model being outdated and not reflective of the average career lengths of those working on behalf of our citizens, it is also a model that our $11.5 billion in pension debt proves the state hasn’t been willing to afford."
The OEA counters with the argument that while the Teacher Retirement System is one of the most underfunded systems in the state it is projected to be fully funded in 17 years. They also claimed that it has been one of the top performing pension funds for the last decade.
To Miller the underfunded TRS is not necessarily the main problem.
"Between Oklahoma’s seven pension plans there are six independent boards. If Oklahoma were to streamline its administration into one board it would likely see up-front savings, but the greater benefit would be in providing accountability for the plans."
The biggest problem OEA and other unions have with the discussion about changing the current plan is this statement from Miller in Capitol Beat OK.
"Policy makers should consider the merits of a defined contribution or hybrid model that would offer choice, flexibility and portability to new hires."
OEA offers a quick comparison between the current system "Defined Benefit" and the proposed "Defined Contribution" plan. They did so in a handout on protecting teacher retirement during recent teachers meetings across the state.
"[Under the current plan] upon retirement, the employee is guaranteed a certain dollar amount in monthly retirement payments for life. [Under Treasurer Miller’s plan] the employee or the state will choose investments that grow or shrink, depending on the stock market. Upon retirement, the employee will receive only the money accumulated in the account. The monthly payments last only as long as the money."
Furthermore, the OEA and Keep Oklahoma’s Promises are questioning the use of the Laura and John Arnold Foundation as advisors on pension change. John Arnold owns a Houston, Texas based Hedge fund. He has allegedly spent $2 million into the push to advise Oklahoma on pension reform.
"Why would a Texas billionaire be interested in Oklahoma pensions and willing to spend $2 million unless there’s money to be made?" Hampton asked. "And if there’s money to be made it shouldn’t be made on the backs of hardworking Oklahoma teachers, firemen and policemen."
Continue reading EastWord News for periodic updates on the pension reform issue. After this week, any bills filed pertaining to the pension funds will be a part of public record and EastWord News will continue to provide updates on the status of this important issue.
