Republican lawmakers meet at state Capitol, discuss priority of overhauling pension system

GOP lawmakers discuss Okla. pension overhaul

OKLAHOMA CITY — An overhaul of the state’s pension system will be a top legislative priority as state leaders grapple with an expected hole in next year’s budget, Republican House leaders said Wednesday.

House Speaker-designate Kris Steele met with GOP members of the chamber to outline budget concerns facing lawmakers when they return to the state Capitol in February.

After the meeting, Steele said addressing the state’s unfunded pension liability — which comes to an estimated $15 billion — will be one of his top goals.

“We can no longer continue doing business as usual,” said Steele, R-Shawnee. “We must address the growing unfunded liabilities of our pension plans and create a modern retirement system.”

House leaders have said a range of changes to the system will be considered, including a transition from the current defined-benefit pension system to a defined-contribution plan, like a 401(k) savings plan.

“I believe each individual should have the ability to pursue his or her own financial freedom,” said state Rep. Randy McDaniel, R-Edmond, who Steele tapped to head the pension overhaul effort. “If we offer greater control and personal choice, workers can determine how much they want to invest, what investment choices meet their needs and risk tolerance, and when they want to retire.”

The proposed changes would apply to new state workers and wouldn’t affect existing state workers or retirees, McDaniel said.

Scott Barger, a spokesman for the Oklahoma Public Employees Association, said lawmakers should first look at adequately funding the state’s pension systems before they make radical changes.

“I think we’re getting the cart before the horse,” Barger said. “Before we decide to slash the employee benefit, let’s look at finding a revenue stream to shore this system up. The past Legislatures created this problem by not funding those systems properly.”

Barger said the state pension for state workers and teachers is one of the most attractive features of state employment.

State Treasurer Scott Meacham, chairman of the state Pension Commission and Democratic Gov. Brad Henry’s point man on budget negotiations, agreed that shoring up the pension system is a priority. Meacham said several proposals are being considered, including changes to vesting schedules, when workers can retire and the way cost-of-living allowances are determined.

Meacham said he supports a move to a “hybrid” system that would include a traditional pension plan, as well as a defined-contribution plan for more mobile workers.

“If you look at a defined-benefit plan, it’s really not as conducive to the modern work force,” Meacham said. “A defined-benefit plan is designed for a worker who is a lifetime employee. What we’re seeing now in state government and other places is you’re getting more transitional workers, who either begin or end their careers in state government.”