Gov. Fallin wants to consolidate pension administration -- firefighters oppose that and more
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Published: 19-Mar-2013

OKLAHOMA CITY – Oklahoma Gov. Mary Fallin, allied with state Treasurer Ken Miller, estimates the Sooner State could save 15 percent in administrative costs with one set of managers for the state’s seven government pension funds. That could amount to more than $120 million over a decade’s time, she says. 

Since her election in 2010, Fallin has pushed efficiencies and government “right-sizing.” Her recent column on pensions drew criticism from firefighter groups – yet her proposal to consolidate administration is not yet in legislative form. 

The state House is now considering a proposal to create an administrative system for workers compensation insurance in Oklahoma, replacing the current litigation-oriented system. Fallin has not yet endorsed the plan, backed by Senate President Pro Temp Brian Bingman, R-Sapulpa, but she wants lower workers compensation costs to help attract or retain businesses and jobs.

Firefighter union members rallied at the Capitol March 18 (Monday) to denounce both Bingman’s ideas for workers’ compensation and Fallin’s ideas for pension consolidation.

On the latter, foes of consolidation say legislative “shell” bills could have a plan inserted as the House and Senate consider each other’s bills in the next few weeks. Fallin raised the idea of administrative consolidation of the government pension systems in a commentary for state Treasurer Ken Miller’s monthly newsletter.

She advocated: “First, streamlining the administration of Oklahoma’s pension boards; second, modernizing our pension benefit plan by providing portability, flexibility and choice to future workers and cost certainty to the state.”

The chief executive projected that consolidation of administrative functions could, over a ten-year period, “provide an additional $120 million to $150 million that could instead be used toward paying retirement benefits.” 

Gov. Fallin asserts, “A centralized board would not mean that the seven plan’s funds would be combined, only the funds’ administration, investment and financial oversight. This is similar to the successful shared IT (Information Technology) services model we have used throughout state government.” 

We have worked diligently with the House and Senate to reduce the unfunded liabilities in our system and cannot stand by silently while the State Treasurer and Governor lobby for their proposals to change our system,” said Herb Bradshaw, executive director of the state Firefighters Association. 

Rick Beams, president of the Professional Firefighters of Oklahoma, said paid and volunteer firefighters were united against “a questionable transition” to administrative workers’ comp. 

At a state Capitol rally on March 18 (Monday), Bradshaw, Beam and their groups went around the bend on work comp reforms and on the governor’s idea for compacting the pension governance into a single body. The unions  want to keep the firefighters’ pension fund with its own board of directors. 

The state faced $16.1 billion in unfunded pension liabilities as recently as 2010. Reforms enacted then – sometimes described by state Rep. Randy McDaniel as “low-hanging fruit” – slashed the funding gap to $10.6 billion.

However, in FY 2012 the projected shortfall increased jumped $1 billion across all systems, to $11.6 billion. The average across the seven systems is 65 percent sufficiency. Financial advisors recommend an 80 percent funding ratio. 

This year’s reports gave fresh impetus to McDaniel’s advocacy of four measures now pending in the state Senate.

McDaniel’s approach does not include the administrative consolidation idea, but it could become part of the reform debate by the end of this year’s legislative session in May. 

You may contact Patrick B. McGuigan at Patrick@capitolbeatok.com and follow us on Twitter: @capitolbeatok.


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