Rep. McDaniel cheers Truth in Funding Act, says structural pension problems remain
By Patrick B. McGuigan
State Rep. Randy McDaniel, an Oklahoma City Republican, has pressed for several major pension reform measures in the current legislative session.
In wake of news reports that several measures have been withdrawn from the legislative calendar — and that a task force will study pension policy issues for the next several months – CapitolBeatOK resubmitted a series of questions to McDaniel and other state leaders who have expressed concern with pension reform .
McDaniel responded via email this evening (Thursday, March 10), telling CapitolBeatOK, “The Truth in Funding Act [House Bill 2132] is one of the most significant pension reform acts in the country. Oklahoma’s unfunded liability is over $16 billion. If this act is passed this session, Oklahoma’s unfunded liability will decrease by roughly $5 billion.
McDaniel said, “All the numbers regarding every plan will change significantly for the better. This will add years to the life of every plan.”
Addressing the issue of cost-of-living-adjustments (COLAs), McDaniel said, “If COLAs have to be either fully funded at the time of enactment or not given, it means assets of the plans are not raided each time a COLA is given.”
McDaniel concluded, “There were many other bills introduced to address the structural problems. Some are still making their way through the legislative process. These changes will provide savings eventually when the new hires eventually retire. But our top priority has always been the passage of the Truth in Funding Act because of the difference it makes in the funding status of the retirement pension plans.”
This morning, CapitolBeatOK reported that Northwestern University (Chicago) Professor Joshua Rauh now projects Oklahoma will be the first state in America to run out of money to pay government pension and retirement benefits. Rauh says that will happen, in his analysis, at some point in 2017.
At last month’s meeting of the state pension commission, Oklahoma Treasurer Ken Miller said that the state’s government pension programs were nearing “crisis level.”
Recently, Moody’s Investors Service began to include unfunded pension liabilities in its consideration of state bond ratings. The decision moved Oklahoma toward the top of states in terms of challenges facing pension and retirement plans, and associated public debt.
Last year, former Treasurer Scott Meacham said at his March revenue briefing “By far the worst of all our systems in terms of unfunded liability is the teacher retirement system, and in fact it is one of the worst in the entire country. It absolutely does pull down our overall numbers.”
Some analyses have placed Oklahoma’s teacher retirement system as the second or third worst in the nation.
Based on 2009 data, the Institute for Truth in Accounting estimated the per-taxpayer burden for Oklahomans to pay the debt was $14,800. It is likely that number would be higher if both Fiscal Year 2010 and 2011 were included.