OKLAHOMA CITY (AP) — Gov. Mary Fallin and Oklahoma Treasurer Ken Miller are working behind the scenes to consolidate the administrations of the state’s largest pension systems, rankling some lawmakers on both sides of the aisle who question why the proposal is being drafted in secret.
While Fallin and Miller both have publicly discussed the idea, the details of the proposal have yet to be unveiled even though legislators must adjourn by the end of May.
“I haven’t seen any language on that. As to what the plan is, I don’t know for sure,” said Sen. Don Barrington, R-Lawton. “When you’re dealing with that kind of money, you need to be open about it.”
Shoring up the huge unfunded liability of the state’s seven pension systems — estimated to be about $11 billion — has been a top priority for Republicans who now control the House, Senate and governor’s office. Legislators successfully reduced the unfunded liability, which is the amount owed in future benefits that exceeds the availability of current funds, by an estimated $6 billion in 2011 by changing the way it awards cost-of-living adjustments. Additional proposals were approved this year to the pension system for firefighters and to create a voluntary, defined-contribution option for newly hired state employees, but Miller said more changes are needed.
“Oklahoma has a pension problem,” Miller said. “Without significant reform, Oklahoma may be unable to keep the promises made to workers without cutting spending in other core areas of government ... implementing tax increases or requiring employees to contribute more to their future benefits.”
Miller said a separate proposal that would involve a potential shift from a traditional pension system to a hybrid cash-balance retirement system for some newly hired state workers also is being discussed, although he acknowledged it’s not clear if that proposal will be considered this legislative session.
The treasurer said he expects a bill will be unveiled next week to consolidate the administration of the state’s seven different pension funds and create one 15-member board to oversee the various funds, which would remain separate. The governor’s office would have the majority of the appointments, while the House Speaker and Senate president pro tem also would appoint members. Representatives from each of the different plans — teachers, firefighters, police, judges and public employees — also would be represented.
The consolidation could save an estimated $50 million annually, mostly in fees paid to various investment companies, according to a study conducted by Massachusetts-based NEPC, a consultant to the Oklahoma State Pension Commission, and distributed to lawmakers last week.
But the plan is being bitterly opposed by some of the groups that represent workers, particularly the firefighters.
“If this is so high on the priority list, why wasn’t it introduced at the start of the session to have time to go through the committee process and have debate from both sides so you have an opportunity to give an in-depth analysis of what they’re proposing,” said Herb Bradshaw, executive director of the Oklahoma State Firefighters’ Association. “To me, it’s a push to garner control of the $20 billion in assets of all these pension systems and put those in the control of cherry-picked appointees.
“This important of an issue deserves more than a cloak-and-dagger, back-door, drop-it-in approach. It needs to be fully vetted by all sides.”
But Miller disputed Bradshaw’s characterization and said the treasurer and governor’s offices have been working with various union groups all session long on the proposal, including the groups representing the firefighters.
“If this is a secret, then it’s the worst-kept secret in the building,” Miller said. “We have been negotiating the details with stakeholders for months.”