September 25, 2013
By Randy Krehbiel
Public employees pushed back Tuesday against escalating pressure from legislative leaders and the Fallin administration to accept changes to the state’s public employee retirement plans.
In a teleconference, representatives of state firefighters, the Oklahoma Education Association, the Oklahoma Retired Educators Association and the Oklahoma Corrections Professionals questioned the motives behind the full-court press being applied to consolidate the seven state-administered public employee pension plans and to convert them to 401(k)-style defined contribution plans. [EXPAND Read more]
“What the state really appears to want to do is put less money into its pension plans,” said Norman Cooper, executive director of the Oklahoma Retired Educators Association.
“When you put less money into those pension plans, then the people who retire under those pension plans are going to get far less money out.
“The direction state leaders appear to want to go, what that is really going to do, is retire many of our public employees into poverty.”
The seven pension funds cover not only state employees but local police officers, firefighters and educators.
In some cases, the pensions are the sole source of retirement income, replacing Social Security.
Similar to Social Security, they are funded through payroll-based contributions from workers and employing government entities.
For at least 20 years, officials have warned that one or more of the funds were in danger of running out of money, with total liabilities – the theoretical amount owed if every beneficiary cashed out on the same day – reaching $16 billion two years ago.
Since then, several changes in the funds and an improving economy have lowered the liability to $11 billion.
This spring, the Legislature approved a measure that would have allowed new employees to enroll in a defined contribution plan instead of one of the existing defined benefit plans.
Gov. Mary Fallin vetoed the bill, saying it did not go far enough. That was widely interpreted as meaning she wanted something that will not give new employees a choice in the matter.
Last week, the issue was the subject of a House of Representatives interim study, which is generally a precursor to legislation in the following spring’s regular session.
In addition to the basic shift in retirement plans, a consolidation of the existing funds’ administrations was also discussed.
Current employees would not be directly affected by a switch to a defined contribution system, but participants in Tuesday’s teleconference contended that it would stop new revenue from flowing into the old system and eventually bankrupt it.
Public employees are also suspicious about the involvement of the John and Laura Arnold Foundation.
John Arnold is a former Enron Corp. executive who cashed out before the energy trading company collapsed a decade ago and went on to make billions through investments. His foundation supports a number of initiatives, including the phasing out of traditional public employee pension systems.
“We just have to ask why John Arnold, a billionaire from Texas, would care about Oklahoma pension systems,” said Linda Hampton of the Oklahoma Education Association. [/EXPAND]