CANCELLED: Visit With Senator Ford About the Pension System
Post date: Jan 18, 2011 2:08:41 AM
THIS EVENT WAS CANCELLED DUE TO INCLEMENT WEATHER
Bartlesville's own Senator John Ford will have an open meeting with Bartlesville public school teachers, sponsored, by the BEA, on Wednesday, February 2 at 4:15 pm in the library at Hoover elementary school at 512 S Madison Blvd (just south of Madison Middle School). The focus will be on possible changes in the Oklahoma Teacher Retirement System.
Senator Ford has been appointed by the Senate President Pro Tem to serve on the Select Committee on Pensions, which is considering changes in the state's underfunded pension plans, including the troubled teacher retirement system. Senator Ford is also Chairman of the state senate's Education Committee and Vice-Chairman of its Education Appropriations Subcommittee, and currently serves as the Assistant Majority Floor Leader.
President Pro Tempore-Designate Brian Bingman announced the creation of a Select Committee on Pensions Friday (December 17). Sen. Mike Mazzei, a Bixby Republican, will serve as Chairman of the committee and Sen. Don Barrington, a Lawton Republican, will serve as Vice Chairman.
“We have promises to uphold to retired teachers and workers in Oklahoma and we also have a duty to ensure sound fiscal security for our state’s future,” stated Bingman. “We can do both, but it will take a team effort and I am confident that these committee members will work together in a way that makes Oklahoma’s future more secure.”
Oklahoma’s pension systems have unfunded liabilities that amount to over $16 billion dollars. Fixing that problem will show the world that Oklahoma is ahead of the curve and a great place to make an investment, Bingman said.
Sen. Mazzei said, “The Legislature will face difficult fiscal challenges in the upcoming session, but that is no reason to pass tough decisions on to the next generation. We are striving to make Oklahoma a more competitive place to live, work and retire. Key to these efforts will be important reforms to shore up our significantly unfunded pension systems to secure retirement for our hardworking state employees and avoid massive budget problems in the future.”
In addition to Mazzei and Barrington, members of the Select Committee on Pensions are: Sen. Patrick Anderson, R-Enid; Sen. Brian Crain, R-Tulsa; Sen. John Ford, R-Bartlesville; Sen. Bill Brown, R-Broken Arrow; Sen. Judy Eason McIntyre, D-Tulsa; Sen. Sean Burrage, D-Claremore; Sen. Susan Paddack, D-Ada; and Sen. John Sparks, D-Norman.
Outgoing State Treasurer Meacham suggested some possible changes to shore up the pension system, dismissing suggestions by some policy groups that switching new teachers from the current "defined benefit" plan to a "defined contribution" plan would be a viable solution.
His suggestions were:
- Revise current law to provide that a Cost-of-Living-Adjustment (COLA) may not be granted by the legislature or the board of any retirement system unless accompanied by funding at an actuarial determined level to fully fund the COLA on a current and future basis.
- Revise the definition of “compensation” on which benefits are paid so that the definition for the Oklahoma Teachers Retirement System (OTRS) is consistent with that of the Oklahoma Public Employees Retirement System (OPERS).
- For OPERS and OTRS, adopt a uniform eight-year vesting period and a retirement age of 65.
- Calculate benefits in the OTRS and OPERS systems based upon the average compensation earned during the five years immediately preceding retirement.
- Amend the OPERS law to eliminate the provision that allows up to 120 days of unused sick leave to be exchanged for an extra year of employment for purposes of calculating retirement benefits.
- Change the OTRS post retirement employment rules to be consistent with those of OPERS (one year before a retired employee can be rehired by another employer in the retirement system).
Meacham's original report is online. It was at least in part a reaction to proposals by the conservative Oklahoma Council of Public Affairs, which is a frequent critic of public education in our state and your teacher union. The OCPA is pushing a switch to a defined contribution retirement system, which we do NOT believe is in the best interest of educators.
Teachers need to be aware that a switch to a defined contribution plan for new or existing teachers would dramatically change the pension system for those affected, exposing them to market risk which could jeopardize their pension and consequent quality of life in retirement. Those who advocate defined contribution plans point out that they may give an employee the ability to tailor the investment portfolio to his or her own needs, as is the case with 403(b) annuity plans. The counter-argument they do not offer up is that many workers lack the financial savvy to choose correct investment vehicles and how teachers in such a system would be exposed to terrific market risks.
For example, the recent housing bubble and severe recession had a devastating effect on many investments. Teachers in a defined contribution plan would be directly impacted by such market downturns, seeing their retirement savings, and consequent retirement benefits, plummet. However, the current defined benefit plan insulates teachers from market risk, shifting it to the overall plan to be managed by professionals.
It is important that Senator Ford hear your priorities in reforming the troubled Oklahoma Teacher Retirement System, and for us to hear his current take on the issue. Come to Hoover on February 2.