On pensions, Deputy Treasurer pleads: “stop studying, take action”
Published: March 25th, 2011
Regina Birchum, a key aide to Oklahoma state Treasurer Ken Miller, has characterized Oklahoma’s poor pension funding as a “looming crisis” in the new Oklahoma Economic Report. Earlier this week, state Sen. Mike Mazzei of Tulsa began an interview with CapitolBeatOK by saying that pensions were the issue “that could implode us if we don’t act sensibly, and soon.”
Birchum, who serves as deputy treasurer for policy and chief of staff in the Treasurer’s office, concluded a 500-word essay in the March 16 report, writing, “Advancing needed reforms may be politically charged, but with the fiscal health of our state at risk, now is the time to stop studying and take action.”
Birchum reflected on the roots and development of the crisis, writing, “The alarm has been sounding for so long on the need for pension reform that it has become little more than white noise to those in government. It seems the pitch has finally pierced through, but as many are discovering, inattentiveness has come at considerable cost.
“Oklahoma has more than $16 billion in unfunded liabilities among the state’s seven pension plans. And while Oklahoma isn’t lacking in company – only one state in the nation can boast of fully funding its public pensions — Oklahoma ranks among the worst funded states on pension liability per capita.”
Oklahoma’s unfunded pension debt equals roughly $4,500 per citizen, and amounts to 8% of Gross State Product. She notes this “isn’t just a matter of the state holding expensive debt; there is the risk of damaging the state’s currently strong credit rating, resulting in higher interest costs. Moody’s Investors Service has already begun revamping its credit rating system to include states’ unfunded pensions. Fitch Ratings recently announced it also would be re-evaluating states’ unfunded pension liabilities as a reason to downgrade bond rating assessments.”
Birchum reports 24 states are considering “significant changes” to government employee pensions, triggering fierce resistance. She notes, “The private sector has already made painful but necessary adjustments to keep business afloat. Multinational corporations like General Motors had to restructure, due in part to the burden of unrealistic employee benefits that were out of line with its global counterparts.
“Airlines and automotive manufacturing are just two examples of industries where workers had to decide between a job with reduced pay and benefits or no job at all. The lesson to the public sector is that no one wins if the pension system fails.”
The pension issue is, she says, “one of basic math. The state can’t keep mandating benefit increases without paying for them and it can’t keep putting off difficult decisions. The current structure of the state’s public pension plans is unsustainable; now government must find a way to honor the promises made to existing workers while finding a funding solution that is fair to both public employees and taxpayers. Policymakers must recognize promises made must be promises kept.”
Birchum continues, “Public workers must understand our pension systems are on a path to insolvency and changes must be made. By working together, common-sense solutions that benefit all can be found.”