Special to The Sun
An Edmond lawmaker’s bill that would put the state firefighter pension system on a path to be 75 percent funded in 30 years was approved by Gov. Mary Fallin on Friday.
States continue to lose ground in their efforts to cover the long-term costs of their employees’ pensions and retiree health care due to continued investment losses from the financial crisis of 2008 and their inability to set aside enough each year to adequately fund their retirement promises, according to an analysis by the Pew Center on the States.
Many experts say a healthy pension system should be at least 80 percent funded.
Oklahoma’s entire public pension system was funded at 56 percent, Texas’ at 83 percent, New Mexico’s at 72 percent, Colorado’s at 66 percent, Kansas’ at 62 percent, Missouri’s at 77 percent and Arkansas’ at 75 percent, according to the 2012 Pew Center analysis.
Oklahoma’s firefighter pension system is funded at 61 percent, said Rep. Randy McDaniel, R-Oklahoma City. The unfunded liability grew by $100 million last year; it currently has an unfunded liability of $1.1 billion.
On April 22, House Bill 2078 by McDaniel was sent to Gov. Mary Fallin for consideration. It received near unanimous support in both chambers, passing 96-1 in the House and 43-0 in the Senate.
HB 2078 addresses the annual funding deficiency and puts the plan on a path to be 75 percent funded in 30 years. The measure would increase the years of service for new firefighters from 20 to 22 years, the years to become vested from 10 to 11 years and increase the minimum age to receive retirement benefits to 50, according to a news release from McDaniel’s office.
Contribution rates paid by firefighters would increase from 8 percent to 9 percent, the municipalities’ contribution rate would rise from 13 percent to 14 percent and the state percentage of the insurance premium tax allocated would increase from 34 percent to 36 percent, the release states.
Additionally, the Deferred Retirement Option Plan is reformed by eliminating the guaranteed return of 7.5 percent after 5 years in the program.
McDaniel, chairman of the House Pension Oversight Committee, said passage of the firefighter pension reform bill required teamwork and resolve. Thanks to the measure, the downward trend of the pension plan will be negated, he said.
“The future of the system will be significantly more secure,” McDaniel said.
Supporters of the bill included the Oklahoma Municipal League. The group recommended reforming the Deferred Retirement Option Plan, extending the age and years of service, improving governance, increasing state contributions based on actuarial requirements and linking the state’s contribution to salaries.
McDaniel filed several other bills related to other Oklahoma pension systems. HB 2079, a teachers’ retirement system bill, was approved by the governor on April 22. A bill related to the Employment Security Act of 1980 also was approved by the governor on April 22.
Lawmakers were still considering several other McDaniel pension system bills.
In her 2013 State of the State Address, Fallin said during the past two years, Oklahoma had reduced the unfunded liability of its state pensions from $16 billion to $10 billion. Since then, the liability crept up to $11 billion. The pensions represented the state’s real debt problem, one leaders must resolve, she said.
State Treasurer Ken Miller, R-Edmond, also has been working on ways to restore fiscal solvency to the pension systems. Miller has said public pension obligations represent a form of debt even though these bills don’t carry specific payment dates for interest and principal like bonds.
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