State employee groups say major pension changes would be 'devastating'

A 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.”