Bill studied, Teacher Retirement System called ‘2nd or third worst’
House Bill 3108, co-sponsored by state Sen. Steve Russell and state Rep. Sally Kern, could end special status given to association executives of certain non-government groups in the Sooner State’s underfunded teacher retirement program.
The legislation crafted by the two Oklahoma City Republicans is on the House floor this week. Consideration comes amidst new concerns about challenges facing Oklahoma’s government pension and retirement programs.
The state’s largest newspaper observed in a Monday (March 8) editorial, “[L]urking for Oklahoma (and most other states) is a state retirement system recognized as being one of the most underfunded in the country.”
The editorial in The Oklahoman continued, “Tackling the state’s underfunded pension plans is an issue that surfaces every so often at the Capitol, generating calls for something to be done, and then it recedes as lawmakers turn their concerns to issues related to the here and now.” The challenge for the state, The Oklahoman concluded, is that “Our prison guards, teachers, road pavers and social workers aren’t getting any younger.’
The editorial referenced a Pew Center on the States analysis placing Oklahoma as among the eight worst states in the country for unfunded pension and retirement system systems.
CapitolBeatOK has reported on the Pew study and critical analysis of Oklahoma’s retirement systems by the Institute for Truth in Accounting, founded by Sheila Weinberg.
High-ranking state officials have taken note of the concerns. Three weeks ago, Tom Spencer, executive director of the Oklahoma Public Employees Retirement System (OPERS) described the Pew Report as “informative” and said, “There are valid reasons for concern raised by the report.” Still, he argued that comparatively sound systems were being lumped with others that are not sound. He contended in an “OPERS Online” statement, the Pew study “is a very good and accurate report, but can be slightly misleading.”
Spencer said “the severely underfunded Oklahoma Teachers Retirement System (2nd or 3rd worst funded in the country) drags all of the Oklahoma plans down in the state-by-state statistics. While the ‘funded ratio’ for OPERS (66.8% at the end of FY 2009) has been adversely impacted by the recent economic downturn, we believe that the funding issues we face are manageable.”
As for teacher retirement, in a recent posting, StateBudgetWatch.org, an arm of Weinberg’s Institute for Truth in Accounting, concluded, “As of June 30, 2009 the State’s Teachers’ Retirement System (TRS) funding ratio (assets set aside compared to pension liability) is less than 50%. But the news gets worse, because that ratio is based on assets being valued using the average market value over the last five years. If the ratio is calculated using the current market value, then the ratio drops to only 38%.”
StateBudgetWatch.org said the critical fund ratios are “due to two factors: the recent downturn in the market values and the State’s routine underfunding of the System.”
To be clear, “For the last four years the State and other employers have been more serious about funding TRS.” However, StateBudgetWatch.org concluded, “there has been only one year in which the System was properly funded. Before 2006 the System was willfully underfunded with contributions between 40% to 72% of what the actuaries said they should be. Because of these two factors the unfunded liability of TRS is 250% of related payroll.”