Proposed legislation to consolidate the staff, boards and offices of several pension plans into one will not be taken up this session.
State Treasurer Ken Miller, who along with Gov. Mary Fallin backed the concept, said not enough time remaining in this year's session and heavy lobbying the past week by firefighters and public school teachers opposed to the legislation led to tabling the issue.
Miller, a Republican as is Fallin, said he hopes the GOP-controlled Legislature will approve an interim study on the topic.
Lawmakers last week finalized agreements on three topics that dominated this year's session — overhauling workers' compensation from a court system to an administrative one, lowering the state's top personal income tax rate and repairing the crumbling state Capitol.
“The three major issues soaked up all the air in the room all session,” Miller said. “We kept waiting for those three main issues to be resolved so that we could turn the focus to pensions, and it just came a little bit too late to then expect the members to be able to fully focus on another major issue for the session.”
Last week's agreements led to Thursday's announcement by Fallin and GOP legislative leaders of a deal on a $7.1 billion budget for the 2014 fiscal year, which starts July 1.
Lawmakers could meet until May 31, but with the budget as well as the workers' compensation, income tax cut and Capitol repairs legislation out of the way, Republican legislative leaders are talking about adjourning by May 24. Some lawmakers are suggesting adjournment could be as early as May 17.
“Pensions are a complicated issue,” Fallin said. “There needs to be more education done of the general public, especially pension holders that we're trying to strengthen the pension system and make sure the pension systems are still there when they retire.”
Seven pension plans
Oklahoma has seven pension plans, six of which have independent boards, staff, offices, consultants and investment managers.
About 220,000 employees and retirees are part of the state's pension system. Those covered include teachers, agency workers, police, troopers, firefighters and judges.
About 400 firefighters from across the state opposed the plan during a rally last month outside the Capitol, and most Democrats voiced opposition to the idea.
“If you want to change the pension system, something as monumental as that, let's do it in the light of day,” said House Minority Leader Scott Inman, D-Del City. “Let's do it through the normal legislative process. We can certainly do it next year.”
A massive email campaign by teachers and firefighters to lawmakers was launched the past week.
“There was a lot of misinformation spread purposefully,” Miller said.
Fallin, who asked lawmakers to consider changes to the pension system during her State of the State address that kicked off the legislation session in February, has said the state spends $80 million to $100 million each year to administer the pensions, and it could realize at least 15 percent in savings by consolidating the plans.
Miller, who also serves as chairman of the Oklahoma State Pension Commission, said the proposal would not change any benefits promised or currently being received, but is intended to reduce administrative expenses. An independent study showed savings could be as much as $50 million annually.
Miller said another pension proposal that won't be taken up this session would change the type of pension for state workers. State employees now pay into the retirement system to receive monthly pensions through a defined benefit plan based on a formula that takes into account their salary and duration of government work.
Martin suggested legislation that would require new employees take part in a defined contribution plan similar to a 401(k) plan, which would provide employees with a payout when they retire based on the amount of money contributed and investment gains or losses.
Two years ago, the state pension system had a $16.5 billion unfunded liability, making it among the worst in the country. New laws passed in 2011 reduced the unfunded liability by nearly one third or about $5 billion.
Miller said the pension system's unfunded liability rate remains the biggest obstacle to Oklahoma obtaining a top AAA credit rating. Oklahoma has an AA2 rating.