House sends teacher retirement changes back to Senate
Published: April 29th, 2011
The Oklahoma House of Representatives voted this week to implement reforms intended to shore up the financially troubled state teacher’s retirement fund and put it on a path to greater solvency.
“It is time for leadership. Leadership is about making difficult decisions in order to solve serious problems,” said state Rep. Randy McDaniel, an Edmond Republican. “This proposal is fair to all parties involved and will significantly help the financial condition of the teachers’ retirement system.”
Senate Bill 377, by McDaniel and state Sen. Mike Mazzei, will increase the retirement age for future teachers. The increased retirement age would apply only to those entering the Teachers’ Retirement System of Oklahoma on or after November 1, 2011.
Under the bill, career teachers whose age and years of service equal 90 would be allowed to retire at age 60 in order to receive full benefits. Non-traditional teachers with fewer years of service could retire at age 65 with full benefits.
“We must reform the Teachers’ Retirement System of Oklahoma and acknowledge the fact that the world has changed since the plan was established in 1943,” McDaniel said. “During the 1940s, life expectancy was age 64, but the normal retirement age for teachers in the system was 70. Today, life expectancy is 78, but many teachers can retire in their 50s. Offering early retirement benefits coupled with increased longevity have been significant factors to the poor funding status of OTRS.”
The Teachers’ Retirement System of Oklahoma is currently one of the worst-funded public pension plans in the country at 48 percent funded with $10.4 billion in unfunded liability. The system has been described as the second or third worst-funded in the United States. However, a thread of good news is the comparatively robust returns on investment in recent years.
The reforms in Senate Bill 377 will help reverse that status, McDaniel says. According to estimates, the proposed changes would produce $1.4 billion in savings over the next 30 years, and achieve savings of $4.8 billion over 50 years.
State leaders have not identified the teacher retirement system as the most significant pension and retirement funding challenge facing Oklahoma.
Senate Bill 377 passed the Oklahoma House of Representatives on a bipartisan vote of 66-24. The bill has returned to the state Senate for consideration.
“This legislation honors our teachers by helping preserve the system for those currently in the plan and those who have yet to enter the ranks of the education profession,” McDaniel said.
Also this week, Oklahoma Treasurer Ken Miller released a set of pension system reforms endorsed this week by the Oklahoma Pension Commission, of which he is chairman. Taken as a whole, some studies have listed Oklahoma’s pension and retirement systems as in the bottom five in terms of unfunded liabilties.
Note: Editor Patrick B. McGuigan contributed to this report.