The Edmond Sun
Speaking in favor of state pension reform will be state Treasurer Ken Miller’s No. 1 priority next legislative session, he said. Miller said that he and Gov. Mary Fallin have teamed up in urging lawmakers to take new hirees to a 401(k)-style of benefit instead of using the current defined pension system.
“We don’t want to change the retirement system for anyone who is currently on the rolls; anyone who is a current retiree or anyone who is currently hired,” Miller told The Edmond Sun.
Miller wants to communicate to credit rating agencies that Oklahoma is responsible in taking care of its debt. Pension debt remains the state’s greatest obstacle to achieve a AAA credit rating, he said.
Several states have moved away from defined pension systems where leadership was outspoken about the need, Miller said.
“That’s what’s incumbent on me and the governor is to engage the public in the educational process and tell them why it is important,” Miller said. “… The more money that goes to our pensions and our pension debt problems, the fewer dollars are going to go to our core services.”
Meaningful pension reform was not accomplished by state lawmakers this year, Miller said. In May, Miller agreed with Fallin’s veto of House Bill 2077 written by state Rep. Randy McDaniel, R-Edmond, and state Sen. Rick Brinkley, R-Owasso. The measure did not go far enough to resolve unfunded liabilities bogging down the pension system, Miller said.
HB 2077 offered a newly defined contribution plan to be made available to all future state employees that participated in the Oklahoma Public Employee Retirement System (OPERS), McDaniel said. HB 2077 would have created a voluntary option for active members of OPERS to participate in a defined contribution plan.
HB 2077 would have mandated participation from first-time elected officials elected after 2014. These officials only account for .003 percent of the total number of active members in OPERS, according to the governor’s office.
“Based upon the legislative fiscal analysis of HB 2077, there is no measurable impact on the state’s unfunded liabilities due to unknown variables such as the number of individuals that may voluntarily elect to participate, their potential career length and salary of those participants,” Fallin said. “Defined contribution plan offer more cost — certainly to employers — but only if there is meaningful participation rates.”
McDaniel said he looks forward to working with Fallin in support of further pension reforms. He and Brinkley have agreed to a joint interim study on the issue.
“Rep. McDaniel has done a tremendous job with pension (reform),” Miller said. “He has taken a third rail of politics — Social Security at the federal level — and I would say pensions is one of the third rails in state politics. He’s taken that on and done a very good job about educating his caucus about the need for reforms and getting them to do something that previous legislators have not been willing to do. And so I applaud him for that.”
In 2011 McDaniel served as the co-author of House Bill 2132 in the House with then- House Speaker Kris Steele, R-Shawnee. Fallin said HB 2132 would reduce unfunded liability in state pensions by $5 billion by eliminating unfunded cost of living adjustments.
“I think anytime you eliminate $5 billion of pension debt, that’s pretty significant,” Miller said. Market returns has since caused pension debt to increase from about $10.5 billion to $11.5 billion, he said.
“We’re now ready for the second round (of reform),” Miller said.